Was albumin exempt food when a drug company sold it to a hospital as a research culture medium?

Plain-English summary

The hospital's albumin purchase was not exempt as food for human consumption. The described albumin was used as a culture medium to grow bacteria and other microscopic organisms for research.

Tax counsel applied section 6359 and concluded that albumin sold in that manner did not qualify as an exempt food product.

Common questions

Was the product's identity as albumin enough to make it exempt?

No. The memorandum focused on how the hospital used it: as a research culture medium, not as food for human consumption.

Who sold and bought the albumin?

The question concerned a drug company's sale to a hospital.

What statute did the memorandum identify?

It expressly cited section 6359 of the Sales and Use Tax Law.

Citations and references

• California Revenue and Taxation Code section 6359 — food-products exemption identified in the memorandum
• Marysville Compliance's April 16, 1962 letter — product, seller, buyer, use, and exemption question described; full letter not reproduced in the official PDF
• Drug company's albumin sale to a hospital for use as a culture medium growing bacteria and other microscopic organisms for research — transaction and use described; underlying product label, formulation, contract, invoice, hospital records, laboratory protocol, research records, and consumption records not reproduced in the official PDF
• Possible later sale, return treatment, audit, assessment, refund claim, appeal, or research-use outcome after the memorandum — no follow-up or final outcome 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/245-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/245-0020.pdf

Original ruling text

State of California

Memorandum

To:

Marysville - Compliance

From:

Headquarters - Tax Counsel (EHS:WEB)

Subject:

Taxability of Albumin

Board of Equalization

245.0020
Sacramento
April 24, 1962

In your letter of April 16, you inquire if “Albumin” sold by a drug company to a hospital to be used as a culture medium to grow bacteria and other microscopic organisms for research would be exempt as a food product. It is our opinion that “Albumin” sold in this manner would not constitute an exempt food product for human consumption as defined by section 6359 of the Sales and Use Tax Law.

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