Was a right to breed a mare to a particular stallion taxable tangible personal property?

Plain-English summary

The described breeding share was not tangible personal property and therefore was not subject to sales tax. Its sole stated benefit was the right to have a thoroughbred mare bred to a particular stallion once each breeding season without an additional charge.

The letter distinguished this contractual right from a fractional ownership interest in tangible personal property, which it said generally would be taxable.

The published source includes an unexplained sentence stating that use tax was properly assessed because it was not paid to DMV. No vehicle or DMV facts appear in the letter, and that sentence is not used as a basis for this breeding-share summary.

Citations and references

• No specific statute or regulation was cited in the published letter.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/110-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/110-0020.pdf

Original ruling text

110.0020

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 2, 1962
“Tangible Personal Property”
Under Sales and Use
Tax Act

W--- & S--Attorneys at Law
XXXX --- Boulevard
--- --- XX, California
Attention:

Mr. M--- E. S---

Gentlemen:
We regret the delay in replying to your letter of September 26. Although sales of fractional interests in tangible personal property are regarded as subject to sales tax, we do not believe that “breeding shares,” as you describe them, constitute tangible personal property for sales tax purposes. Since the use tax was not paid to DMV, the tax was properly assessed in the audit. We reach this conclusion in view of your statement that “a share owner’s sole rights under the agreement generally are to have a thoroughbred mare bred to such stallion once each year during the breeding season without charge.” Very truly yours,

E. H. Stetson
Tax Counsel

EHS:fb
cc:

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