Which attached business assets were realty when sold with land and buildings, and which small equipment remained tangible personal property?

Plain-English summary

Sales-tax counsel classified several attached assets as part of the realty when the business sale also included the buildings and land:

• heavy sawmill planers and moulding machines;
• a sawmill carriage and circular saw used for the first cut of logs;
• a grocery-store compressor and heavy-duty motor serving a walk-in beer cooler; and
• a service-station hydraulic hoist.

A small half-horsepower bench grinder remained tangible personal property.

Common questions

Did the heavy equipment classification apply without attachment?

No. The memorandum expressly conditioned real-property treatment on attachment to the sold realty.

Was every machine in the business treated as realty?

No. The small bench grinder was personal property.

Did the memorandum give a general test for other equipment?

No. It classified only the listed items on the stated facts.

Citations and references

• No statute, regulation, or case was cited in the supporting memorandum.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/150-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/150-0220.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

150.0220

Sacramento
September 10, 1957
To:

Marysville – Tax Administrator

From:

Headquarters – Sales Tax Counsel (JJD)

Subject:

Taxability of Equipment Included in the
Sale of a Business
It is our opinion that when the sale of a business includes buildings and land the following items should be considered as part of the realty, if attached thereto.

1. Planers and moulding machines which are heavy equipment used in a sawmill.
2. Carriage and circular saw, used in a sawmill for the first cutting of logs into
   lumber.
3. Compressor and heavy duty electric motor used in a grocery store in connection
   with a walk-in beer cooler.
4. Service station hydraulic hoist.
   As you will notice, the above-mentioned items correspond to items 1, 2, 4 and 5 mentioned in your letter of August 1. We are of the opinion that the small one-half horse power bench grinder, listed as item 3, should be considered as tangible personal property.

J. J. Delaney
JJD:rc