Did a community-college building qualify for the 40% rule without completing the required approval process?

Plain-English summary

Community colleges were included in the then-recent factory-built school-building amendments, but the benefit was conditional. The memorandum says that a community college that did not complete the process required by Assembly Bill 4029 would not receive the special rule measuring tax on 40% of the selling price.

The official annotation describes the missing step as obtaining state-architect approval for the factory-built building purchase. The memorandum does not decide the separate onsite-assembly question it mentions.

Common questions

Did community-college status automatically trigger the 40% measure?

No. The required statutory process still had to be completed.

What happened if the process was skipped?

The community college did not receive the special 40% treatment.

Did the memorandum resolve onsite assembly before attachment?

No. It expressly says that question arose and went unanswered.

Citations and references

• California Revenue and Taxation Code section 6012.6 — factory-built school-building rule identified by the official annotation
• Assembly Bill 4029, 1990 California Statutes chapter 763 — process and amendment discussed by the 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/190-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/190-0253.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Glenn Bystrom

From:

Donald J. Hennessy
Senior Tax Counsel

Subject:

Relocatable Classrooms

190.0253
Date

November 16, 1990

All were sorry you missed the meeting of November 7, 1990 with representatives of the relocatable classroom industry. One question which arose at such meeting concerns your October 26, 1990 letter (copy enclosed) to T--- S---, the Controller of M--- R---. On page 2, of such letter, in the first sentence of the third paragraph you stated, “If you acquire a school building and have a contract to either sell or lease it to a school district at the time of purchase, you must not issue a resale certificate for this purchase.” It was suggested at the meeting that the words “either sell or” should be deleted, so that the sentence would only apply to school buildings acquired for leasing. We could think of no other reason why a school building specifically purchased for resale could not be purchased on a resale certificate. Would you clarify this sentence in another letter to Mr. S--- with copies to Gary Jugum, Ray Hirsig, Bob Sullivan, and myself. Another problem which arose at the meeting, and which went unanswered, involved the onsite assembly of a relocatable classroom prior to actual attachment (installation) of the classroom to the realty. All of us thought we have covered this in previous meetings, but could not locate an answer. Possibly this should be discussed and our conclusions communicated to the industry representatives who participated. Two conclusions worthy of note mentioned at the meeting were (1) church schools are not included even under the most recent amendments and (2) community colleges sometimes do not go through the process as required in AB 4029; if they do not, they will not get the benefit of the 40% rule.

DJH:es
3643I
Enc.
cc:
Mr. Gary J. Jugum
Mr. Bob Sullivan
Mr. Ray Hirsig