Were Tom and Jerry batter and eggnog batter exempt even though buyers principally used them in alcoholic drinks?

Plain-English summary

Tom and Jerry batter and eggnog batter were exempt food products even though their principal use was as ingredients in alcoholic drinks.

The memorandum relied on the batters being made from food ingredients such as sugar, butter, and spices and ultimately intended for human consumption. Under the historical rule it applied, later processing into a human-consumption product that was not itself classified as “food” did not make the original food product taxable.

The annotation page dates the summarized opinion December 1, 1950. The published supporting memorandum itself is dated July 16, 1974, so that source date controls this page's issued_date.

Common questions

Did the alcoholic-drink use make the batter taxable?

No. The memorandum treated the batter itself as a food product before its use in the drink.

What ingredients did the memorandum identify?

It named sugar, butter, spices, and similar food products.

What examples supported the processing rule?

Historical Ruling 52 used sugar for homemade candy and grapes for homemade wine as examples of exempt food later processed by the consumer.

Citations and references

• Historical California Sales and Use Tax Ruling 52, paragraph C — cited and characterized; ruling text and publication record not reproduced in the official PDF
• J. S. Knight's November 21 memorandum asking about Tom and Jerry and eggnog batter — year and memorandum contents not supplied or reproduced in the official PDF
• Unidentified prior consistent Board treatment of Tom and Jerry and eggnog batter as food — treatment referenced without dates, opinions, rulings, annotations, or supporting records in the official PDF
• Batter product evidence concerning principal alcoholic-drink use, human consumption, and sugar, butter, spices, and similar food ingredients — facts supplied; complete recipes, formulations, ingredients, labels, directions, packages, samples, tests, invoices, and sales records not reproduced in the official PDF
• Official Annotation 245.1820's December 1, 1950 date and Tom and Jerry title form — annotation does not explain its conflict with the official PDF's July 16, 1974 date or supply the earlier source or publication record
• Possible later product sale, recipe or formulation change, audit, assessment, refund claim, appeal, or other agency action — 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/245-1820.pdf

Original ruling text

State of California

Board of Equalization

Memorandum
To:

Mr. J. S. Knight

From:

E. H. Stetson

Subject:

Tom & Jerry, and Eggnog Batter

245.1820
Date:

July 16, 1974

In answer to your memo of November 21, we advise that we have consistently noted that Tom & Jerry batter and Eggnog Batter are food products for human consumption, even though their principal purpose is, of course, as ingredients of alcoholic drinks. The basis for our opinion is that the batter itself is made up of ingredients which are themselves food products, such as sugar, butter, spices, and the like, and is ultimately for human consumption. You know, of course, that Ruling 52 provides in Paragraph C that if a given article is properly regarded as a “food product”, the tax does not apply to its sale, even though the consumer will process or incorporated it into a product such as an alcoholic beverage which is for human consumption but which is not a “food product.” An example is given of sugar sold to a housewife to be used in making candy, and grapes to be used in wine for home consumption. We believe the same principle is applicable in the case of Tom & Jerry and Eggnog batter.

EHS:ph