Were water meters sold in place with a private water system taxable when they stood on land the seller did not own but had a right to remove them?

Plain-English summary

A petitioner challenged tax on water meters sold in place as part of a private water system. The meters were located on land the seller did not own.

Associate tax counsel applied the Board's prior position that the seller's right to remove the meters constructively severed them from the realty. The in-place transfer was therefore a sale of tangible personal property.

Staff recommended that the Board leave the tax determination unchanged. The petitioner could still request a Board hearing within 30 days, so this was a recommendation rather than a shown final decision.

Common questions

Did leaving the meters physically in place prevent taxation?

No. The seller's removal right produced constructive severance under the stated policy.

Why did land ownership matter?

The seller did not own the land but retained the right to remove the meters installed there.

Was this the Board's final ruling on the petition?

Not in the supporting letter. It recommended no adjustment and preserved the petitioner's hearing option.

Citations and references

• No statute, regulation, or case was cited in the supporting 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/150-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/150-0680.pdf

Original ruling text

150.0680

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

September 26, 1956

L--- A--- D--- of W--- and P--P.O. Box XXXX, --- ----- --- XX, California

Attention:

-- XXXXXX
Now: SR -- XX XXXXXX

J--- P. B---

Gentlemen:
We have considered the petition for Redetermination and the information presented at the preliminary hearing with respect to the above matter. In the past we have ruled that the sale of water meters in place as a part of the sale of a private water system is a sale of tangible personal property when the meters are on land not owned by the seller. Our ruling is based upon the fact that the seller has a right to remove the meters and the sale constitutes a constructive severance of the meters from the realty. For this reason we will recommend to the Board that the tax be redetermined without adjustment. If you desire a Board hearing on this matter, please advise us within 30 days. Very truly yours,

John H. Murray
Associate Tax Counsel

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