Which exotic game-farm animals qualified for California's food-animal exemption?

Plain-English summary

The memorandum applied the food-animal test to an exotic game farm. It concluded that Scotch cattle and Texas longhorn cattle qualified because cattle ordinarily produce human food. U.S. buffalo or bison also qualified based on an established restaurant market.

Zebras, camels, llamas, miniature horses, and miniature donkeys did not qualify. Retail sales of those animals or their offspring were taxable, and importing nonexempt animals could create use tax like other nonexempt tangible personal property.

The proposed hunting arrangement could not be resolved from the hypothetical facts. The taxable selling price would depend on the agreement and services provided, while the animal taken would determine whether an exemption applied; counsel declined to speculate without the actual details.

Citations and references

• California Revenue and Taxation Code section 6358 (as cited)
• California Sales and Use Tax Regulation 1578 (as cited in the source)

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/110-0085.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Marysville – Compliance (COE)

From:

Tax Counsel (JM) - Headquarters

Subject:

Exotic Game Areas

110.0085

Date:

June 8, 1971

Your memorandum of April 16, 1971 and the report attached thereto raises questions of application of the tax in connection with a “game” farm. We will first discuss the questions posed in the report attached to your memorandum. We understand that the operation will be owned by on K--- H--- dba S--- G--- F---. The prime function of the farm will be the breeding and sale of offspring from: Zebras, Camels, Llamas, Miniture Horses, Miniture Donkeys, Scotch Cattle, Texas Longhorn Cattle, and Buffalo (no dangerous type animals. That is carnivorous). A secondary function of operation may be the charging of fees for admission, solely for viewing the animals. Section 6358 of the sales tax law and regulation 1578 provide that the sale of or the storage, use or other consumption of any form of animal life of a kind, the products of which ordinarily constitute food for human consumption are exempt from tax. We believe the test is whether the animals qualify as animals the products of which ordinarily constitute food for human consumption. It is our opinion that the Zebras, Camels, Llamas, Miniture Horses, and Donkeys clearly would not qualify. We believe that the Scotch Cattle and the Longhorn Cattle do qualify since “cattle” is a specie the products of which ordinarily constitute food for human consumption. We have previously ruled that Buffaloes were animal life the products of which ordinarily constitute food for human consumption (Ann. No. 1070.37). This was based on the fact there was an established market (restaurants) purchasing these animals for food. We believe this included only the United States buffalo (Bison).

Marysville – Compliance (COE)

-2-

June 8, 1971
110.0085

[Illegible 3-line paragraph here].
The sale of those animals or the offspring which do not qualify under the above test are subject to the tax. The use tax on the importation of the animals (not exempt under §6358) would apply in the same manner as in the case of any other tangible personal property not exempted from such tax. Your memorandum also presents the hypothetical situation in which the owners of the game farm may institute controlled hunting on their area. As an example, you state that they might charge $500 for the privilege of hunting and if the hunter successfully bags an animal there will be an additional charge of $500. You ask what the sales price should be and how tax should apply as between “edible” and “trophy” animals. The selling price of the animal in the event one is taken would depend upon the terms of the agreement entered into between the “farm” and the hunter. The services provided in the agreement would be pertinent. The type of animal taken would determine whether or not tax would apply. We believe that without knowing the actual specific details of the contemplated enterprise, it is inappropriate to speculate on the application of the tax at this point.

JM:smb