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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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395.0000 Occasional Sales—Sale of a Business—Business Reorganization—Regulation 1595
Annotation 395.0200
(b) Activities Requiring Permit—Property Held or Used In
395.0200 Insurance Company. An insurance company operates a data processing center. The company owns the data processing equipment. The company performs certain data processing services for independent companies. Some of the services are subject to use tax. The insurance company sells its data processing equipment to another firm which is neither an insurance company nor a bank. Although the insurance company cannot be required to hold a seller's permit, the purchase of the equipment is not exempt as an occasional sale under sections 6367 and 6006(a) of the Revenue and Taxation Code since the equipment was held and used by the insurance company in the course of an activity for which the company would have been, but for the provisions of California Constitution, Article XIII, section 14 4/5(f), required to hold such a permit. To interpret section 6006(a) in any other manner would be to defeat the statutory scheme of taxation sanctioned by the California courts in Beneficial Standard Life Insurance Co. v. State Board of Equalization, 199 Cal.App.2d 18. 6/3/69.