Could nurseries buy metal cans tax-free when plants grew in the cans before being sold with them?

Short answer Yes. Plant growth in the cans did not defeat the nonreturnable-container exemption when the nursery made no other use and sold each can with its plant.

State

Ruling

Annotation 195.0560

Tax type

Sales and Use Tax

Issued

1952-11-05

Issued by

California State Board of Equalization

Requested by

Redacted nursery-industry association representative

Topics

nurseries plants nonreturnable containers resale exemption sales tax

Source

View Original PDF

Apply this to your situation

This page answers the general question as of 1952. Ask about yours and see what current California tax law says, with citations.

Disclaimer: This November 5, 1952 opinion assumes the nursery made no use of the cans other than holding the plants, the plants stayed in the cans until sale, and the cans were sold with the plants. The recent conference and the current M--- N--- audit it references are not separately documented in the official PDF. Different reuse or intermediate-use facts may change the result. Current container and sales-tax rules control.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.

View original ruling (PDF)

Plain-English summary

California treated metal cans sold to nurseries as exempt nonreturnable containers when the nurseries placed plants in them and later sold the cans together with the plants.

The plants could grow in the cans until they were ready for sale. That growth did not count as an inconsistent use because the nurseries made no other use of the cans and the plants remained in them until sale.

Common questions

Did the plants' growth make the nursery the consumer of the cans?

No under the stated facts.

Citations and references

Recent Board-office conference — nursery metal-can issue referenced; date, participants, and separate conference record not provided in the official PDF
Current audit of M--- N--- — Los Angeles District Office was to receive the stated conclusion with specific attention to the audit; audit period, findings, and separate audit record not provided 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/195-0000-all.html
Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/195-0560.pdf

Original ruling text

195.0560

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 5, 1952

Mr. E--- J. M--Executive Secretary
C--- A--- of N--XXX --- Building
---, XX, California
Dear Mr. M---:
Upon further consideration of the problem discussed at our recent conference in this office we have reached the conclusion that the sales of metal cans to nurseries is exempt from sales tax as sales of nonreturnable container where the nurseries place plants in the containers and sell the containers along with the plants. It is understood that no other use of the cans is made by the nurseries and that the plants remain in the cans wntil sold. The fact that the plant, after being placed in the can, grows in the can until it is large enough to be offered for sale will not be considered a use of the cans inconsistent with their status as exempt nonreturnable containers. We are advising our Los Angeles District Office to this effect, calling specific attention to the current audit of M--- N---. Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ph
cc:

Pasadena - Auditing

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