Were small wholly prefabricated incinerators fixtures, and what measure applied to a manufacturer-installer?

Plain-English summary

Small incinerators wholly prefabricated before delivery, with no construction performed onsite, were fixtures even though they improved real property.

When the manufacturer installed such an incinerator, the historical tax measure was fabricated cost.

If physical characteristics made the classification close, Tax Counsel directed reviewers to examine whether the contract contemplated construction or instead used words showing a sale of a complete incinerator to be installed by the seller, buyer, or another party.

Common questions

Were small prefabricated incinerators materials?

No. The memorandum classified them as fixtures.

What measure applied to a manufacturer-installer?

Fabricated cost under the historical rule.

What mattered in a close case?

Physical characteristics and the parties' contract language and intent.

Citations and references

• Former California Sales and Use Tax Ruling 11 — wholly prefabricated small incinerators as fixtures and fabricated-cost measure for manufacturer-installers applied
• Los Angeles Review position — smaller incinerators wholly prefabricated rather than constructed at least partly on the job treated as fixtures; identified and accepted, but the underlying submission is not reproduced in the official PDF

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/190-1740.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Los Angeles – Review (PER)

From:

Headquarters – Sales Tax Counsel

Subject:

Status of Application of Tax
to Incinerators

190.1740
Sacramento
April 30, 1953

S--- I---, INC
XXXX --- BLVD

We are inclined to agree with your position that the smaller incinerators that are not constructed at least in part on the job and are wholly prefabricated should be considered fixtures under Ruling 11. They are, of course, improvements to real property, but in the event these smaller incinerators are installed by the manufacturer, the measure of the tax should be the so-called “fabricated cost”. Where the physical characteristics are such that the question becomes close, the terms of the contract for their erection and installation should be examined to determine whether the parties appear to contemplate a construction contract or whether words of sale are used indicating intention on the part of the seller to sell and on the part of the buyer to buy a complete incinerator to be installed by the seller or perhaps the buyer or someone else. E. H. Stetson EHS:ph