Did extensive amateur and professional racing qualify as demonstration or display for a sports car bought under a resale certificate?

Plain-English summary

A sports-car dealer bought a vehicle under a resale certificate and then used it extensively in amateur and professional racing.

California concluded that this went beyond “demonstration and display” under § 6094. The racing was taxable dealer use, and use tax was measured by the vehicle's purchase price.

Common questions

Did racing qualify as demonstration or display?

No.

What tax measure applied?

The dealer's purchase price for the vehicle.

Citations and references

• Revenue and Taxation Code § 6094 — demonstration-and-display provision applied in the memorandum
• Internal request and dealer records — request, resale certificate, purchase record, and amateur or professional race records not supplied 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/215-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/215-0460.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. R. N. Zambelich

From:

Charles H. Otterman

Subject:

“H”

215.0460

Date:

Aug. 17, 1964

We understand that “H”, a sports car dealer, purchased a vehicle from an automobile dealer under a resale certificate and thereafter used the vehicle extensively in amateur and professional racing. You ask our opinion as to whether this use goes beyond the meaning of “demonstration and display” as contained in Section 6094. It is our opinion that it does and such use constitutes a taxable use giving rise to the imposition of the use tax on the dealer measured by the purchase price of the vehicle.

CHO/GLR:dse

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