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Business Taxes Law Guide – Revision 2022
 

Cigarette and Tobacco Products Licensing Act Regulations

Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration — Business Taxes (State Board of Equalization — Business Taxes — See Chapters 6 and 9.9)
Chapter 9.5. Cigarette and Tobacco Products Licensing Act of 2003

Article 2. Licenses—Issuance, Transfer and Denial

Regulation 4505


Regulation 4505. Transfers or Sales Between Related Parties.

Reference: Sections 22973.1, 22977.2, and 22979, Business and Professions Code.

(a) Presumption—Not Arm’s Length. When a violation or violations of the Act have occurred at a licensed location, the sale of the business between and among relatives (by blood or marriage, which relationships include, but are not limited to, spouses, parents, children and siblings), a partnership and its partners, a limited liability company or association and its members, a corporation and its shareholders, and persons and entities under their control, is presumed to be a sale for the primary purpose of avoiding the effects of violations of the Act and not at arm's length.

(b) This presumption may be rebutted only by clear and convincing evidence to the contrary.

(c) The purchaser has the burden of proving that the transaction was an arm's length transaction.

History—Adopted December 12, 2006, effective April 21, 2007.