Was a jeweler's furnishing of expensive real jewelry for actresses to wear in motion pictures a taxable use?
Apply this to your situation
This page answers the general question as of 1959. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
A jeweler furnished expensive real jewelry to motion-picture studios so actresses could wear it while making films. The example given was a diamond necklace, not imitation or costume jewelry.
The Board treated this arrangement as demonstration and display rather than taxable use. The jewelry lost little or no value, and the jeweler's purpose was to sell the merchandise by exposing it to potential buyers through the film production.
What this means for you
Jewelers and luxury retailers
Document that the exact merchandise remains saleable and that the entertainment use is intended to promote its sale.
Film studios
The memorandum addressed property furnished by the jeweler as promotional display inventory; it did not classify a studio's own costume or production purchases.
Accountants and tax professionals
The Board emphasized both the merchandise's minimal loss of value and the seller's sales objective. Different products or wear patterns may produce different facts.
Common questions
Q: Did the studio pay for the jewelry use?
A: The memorandum does not say whether the studios paid.
Q: Was costume jewelry covered?
A: No. The opinion specifically distinguished expensive real jewelry from imitation or costume jewelry.
Q: Why did the arrangement qualify as demonstration?
A: The jeweler was seeking to sell the jewelry, and film use displayed it without materially depreciating its value.
Q: What example did the memorandum give?
A: A real diamond necklace.
Citations and references
- Los Angeles Auditing's April 7 memorandum — year and separate memorandum not supplied in the official PDF
- Studio arrangements and jewelry records — facts described without agreements, item records, or later audit action in the official PDF
Source
- Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
- Annotation page: Annotation 210.0180
- Original supporting opinion: 210.0180 PDF
Original ruling text
State of California
Board of Equalization
Memorandum
To:
Los Angeles – Auditing (CHS)
From:
Headquarters – Sales Tax Counsel
Subject:
L--- --- C--XXXX --- Boulevard
210.0180
Sacramento
May 13, 1959
now: -- XX-XXXXXX
Account -- - XXXXXX
With reference to your memorandum of April 7, we have considered the matter and it is our opinion that the furnishing of jewelry to the motion picture studios for the use of actresses while making motion pictures may be considered as displaying of the merchandise and not such a use as to require payment of tax by the jeweler upon the cost of the jewelry. As the jewelry is not imitation jewelry, but is real jewelry of the expensive variety, as for example a diamond necklace, there would, of course, be little or no depreciation in the value of the jewelry. Furthermore, as you point out, the jeweler is seeking to sell his merchandise by allowing actresses to wear the jewelry during the making of pictures. This would seem to be a form of demonstration.
E. H. Stetson
EHS:rg
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