Were separately leased parking gates and door locks taxable as tangible personal property?

Plain-English summary

Parking gates and door locks were fixtures, but section 6016.3 treated them as tangible personal property for this lease because the lessor retained the right to remove them and was not also the lessor of the underlying realty.

Lease receipts were therefore taxable unless the items had been acquired tax-paid and were leased in substantially the same form as acquired.

The Legal Department declined to extend an earlier parking-gate result. It said that result appeared influenced by hardship and testimony that the removal right had no value, so it was intended to remain limited to that case.

Common questions

Did fixture status end the analysis?

No. Section 6016.3 supplied a lease-specific rule that treated these fixtures as tangible personal property.

What facts mattered?

The lessor retained removal rights and did not also lease the realty to which the gates and locks were attached.

Were all lease receipts taxable?

The memorandum said tax was due when the items were not leased in substantially the same form as they had been acquired tax-paid.

Citations and references

• California Revenue and Taxation Code section 6016.3 — treatment of fixtures as tangible personal property when leased with a retained removal right by a lessor that does not lease the realty applied
• June 28 West Los Angeles Auditing memorandum — requested advice concerning the parking gates and door locks; the source supplies no year, facts, or separate copy
• Unidentified earlier Board parking-gate case and testimony that its removal right had no value — hardship-based result distinguished and limited to that case; the source supplies no case name, date, ruling number, testimony, or decision

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/190-2032.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

West Los Angeles – Auditing (JD)

From:

Headquarters – Legal (TPP)

Subject:

G--- H--- Inc.
C--- K--- Division

190.2032

Date:

September 16, 1977

SY -- XX-XXXXXX

In response to your memorandum of June 28, we have concluded that the parking gates and door locks in question are fixtures which, under Section 6016.3, are to be treated as tangible personal property when leased with the right of removal by the lessor, where the lessor is not also the lessor of the realty to which the items are affixed. Accordingly, tax is due on the lease receipts when the items are not leased in substantially the same form as acquired tax-paid. The reason why the Board concluded the parking gates were not personal property in the earlier case is not entirely clear, but the conclusion appears to have been influenced by the hardship in the particular case and by certain testimony that the right of removal in that particular case was of no value. Under the circumstances, we think the conclusion was intended to be limited to that particular case.

TPP:po

cc:

R. Nunes
D. F. Brady
W. E. Burkett
J. H. Murray
G. L. Rigby