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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
S
515.0000 Service Enterprises Generally—Regulation 1501
Annotation 515.0390
(c) Original Manuscripts, Plans, Etc.
515.0390 "Breadboards." A taxpayer enters into an agreement with a customer to furnish "breadboards." The agreement defines a "breadboard" as "an assembly of MOS devices which together will functionally duplicate a Production Set and will have the performance characteristics specified."
The agreement expressly provides that the taxpayer will develop two breadboards for which it will receive payment of time and materials specifically devoted to the two breadboards. The customer agrees to furnish engineering, consultation, and the necessary equipment to support the development. The agreement further provides that proprietary rights, patents and indemnities, and the technology used to develop the breadboards shall remain vested in the taxpayer but that the breadboards, upon acceptance, become the sole property of the customer.
The customer is contracting for items of tangible personal property to be developed from predetermined specifications and not for the ideas, data, or information relating to the manufacture of the breadboards. The customer is primarily interested in acquiring the breadboards for their intrinsic value as items and not in the purchase of the data, as such, in the course of manufacture. Therefore, the entire sales price of the breadboard models is subject to the tax as the sale of tangible personal property. 7/23/70.