Did portable air conditioners inserted into purpose-built apartment wall sleeves become real-property fixtures?

Plain-English summary

During apartment construction, the contractor created a wall opening in each unit, fitted it with a metal sleeve, and finished the surrounding wall. Portable air conditioners later were inserted into the sleeves and plugged into electrical outlets.

Although the original 1972 memorandum called the classification a close question, staff treated the installed units as fixtures and part of the realty. The Legal Division reviewed and agreed with that conclusion in 1996.

Accordingly, neither a separate tax on the air-conditioner lease nor a separate tax on its sale applied when the unit was leased or sold together with the apartment structure under the facts reviewed.

Common questions

Did the plug-in connection prevent fixture status?

No.

What construction fact mattered?

The apartment was built with a dedicated wall opening and metal sleeve for the unit.

Did Legal approve the original conclusion?

Yes, in 1996.

Citations and references

• No statute or regulation was cited in the source

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/190-2070.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Los Angeles – District Principal Auditor

From:

Principal Tax Auditor

Subject:

Portable Air Conditioners

190.2070

Date:

April 17, 1972

Your letter of April 6 concerning the application of tax to portable air conditioners placed in a sleeve in the wall which was constructed for that purpose has been discussed with Mr. T. P. Putnam. While this is a close question, we both are of the opinion that these units are fixtures and should be considered part of the realty. Accordingly, neither the lease nor the sale of it, when leased or sold together with the apartment would be subject to tax.

R. Nunes
RN:iw

State of California

Board of Equalization
Legal Division (MIC:82)

Memorandum

To:

Mr. Glenn Bystrom

From:

Gary Jugum

Subject:

Non-Attorney Opinions

190.2070

Date:

July 10, 1996

I have reviewed Bob Nunes’ memorandum of April 17, 19727 to the Los Angeles District Principal Auditor. We are in agreement with his conclusion, as follows:

Portable Air Conditioners. During the construction of an apartment house, the contractor provides an opening in the wall of each unit for the insertion of a portable air conditioner. The opening is fitted with a metal sleeve, and walls are then finished. The air conditioners are later inserted in the sleeve and plugged into an electrical outlet. The air conditioners are fixtures when installed and are realty when the structure is either leased or sold. 4/17/72.