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Was liquid oxygen used to aerate densely stocked fish ponds exempt as a drug or medicine?

Short answer No. Liquid oxygen added so densely stocked fish could get enough oxygen was taxable because it was not used to prevent or control disease and was not a drug or medicine.
State
CA
Ruling
Annotation 110.0710
Tax type
Sales and Use Tax
Issued
1997-11-19
Issued by
California State Board of Equalization
Requested by
A Board supervising auditor seeking review of a draft response about liquid oxygen used in fish ponds
Topics
liquid oxygen drugs medicines disease prevention agricultural exemption
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1997. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1997
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an internal California State Board of Equalization senior-tax-counsel memorandum dated November 19, 1997, published by CDTFA as support for a sales and use tax annotation. It analyzes then-current section 6358.4 because amendments to Regulation 1587 had not yet been approved, and its result depends on oxygen being used for aeration rather than disease prevention or control. Another taxpayer should not treat it as binding and should check current aquaculture, animal-drug, medicine, disease-control, agricultural-exemption, and sales-and-use-tax rules. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

A fish producer added liquid oxygen to ponds because the density of fish was too high for them to obtain enough oxygen naturally.

The oxygen purchases were taxable. Counsel concluded that liquid oxygen used for this purpose was not a drug or medicine under section 6358.4 because it was not used to prevent or control disease.

The memorandum used the statute rather than then-pending amendments to Regulation 1587, which had not yet received approval.

Citations and references

  • California Revenue and Taxation Code section 6358.4 (as cited)
  • California Sales and Use Tax Regulation 1587 (as discussed)

Source

Original ruling text

State of California

Board of Equalization
Legal Division-MIC: 82

Memorandum
110.0710

To :

Mr. Vic Anderson
Supv. Aud. Eval. & Plan. Sec.
(MIC:40)

From :

John L. Waid
Senior Tax Counsel

Subject:

Date: November 19, 1997

Telephone: (916) 324-3828

CalNet 454-3828

S--- S--- F--- California LLC
[No Permit Number]
Liquid Oxygen to Aerate Water

I am responding to your memorandum to Assistant Chief Counsel Gary J. Jugum in which you asked him to review a draft letter written by Senior Tax Auditor James C. Kuhl to the taxpayer. S--- S--- F--- (“S---”) raises fish to be sold to the food service industry. Since the density of fish in its ponds is too great for them to get enough oxygen from the water naturally, S--- buys liquid oxygen and adds it to the water. S--- argues that its purchase of the oxygen is exempt from tax under Regulation 1587. As the amendments to Regulation 1587 to incorporate the recent statutory changes have not yet been approved by OAL, the proper analysis is under the applicable statute, Section 6358.4 (Stats. 1995, Ch. 694), rather than the regulation. We do agree with Mr. Kuhl’s conclusion that sales of liquid oxygen for this purpose are subject to tax, because liquid oxygen is not a “drug” or “medicine” under Section 6358.4 as it is not used for the prevention or control of disease.

JLW:sr

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