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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 395.2541
(l) Sales Between Parent and Subsidiaries
395.2541 Transfer of Assets to a Division. On 9/12/72, the Board of Directors of Corporation A approved the transfer of assets of a division to Corporation B, a wholly owned subsidiary of A. The transfer took place on 11/7/72. On 9/12/72, its Board also approved in principle the transfer of assets of another division and certain real property to Corporation C, another wholly owned subsidiary. The transfer of the division was completed on 1/18/73 and the transfer of the realty was carried out on or before 1/18/73. If all of the transfers are treated as one transaction, it would meet the qualifications of the provisions of section 6006.5(b).
The transfer to subsidiary B is subject to tax. section 6006.5(b) speaks in terms of the "transfer." The test must be met immediately after the transfer. In the case of the transfer to B, A continued to own assets immediately after the transfer; thus, it failed to meet the statutory requirements.
In the case of the transfer to C, the statutory requirement was met and the transaction qualifies as an occasional sale. 5/21/75.