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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 395.2610
(l) Sales Between Parent and Subsidiaries
395.2610 Vehicle Transfers to a Subsidiary by a DMV Licensed Dealer. A dealer licensed by the Department of Motor Vehicles (DMV) transferred tow trucks to a corporate subsidiary in exchange for first issue stock and the assumption of liabilities. The transfer did not include substantially all of the dealer's assets. The transaction was subject to sales tax. The occasional sale exemption provided in section 6367, or the exemption in section 6281, do not apply because the dealer did not transfer substantially all of its assets. The exclusion provided for transfers to commencing corporations solely for first issue stock is not applicable because the subsidiary assumed liabilities.
The sales tax, rather than use tax, applies (Regulation 1595(b)(4)) because the dealer was licensed by DMV. 2/8/94.