Ezel / Tax Rulings / CA

Was converting a transport loader from hydraulic to mechanical operation taxable fabrication or repair?

Short answer Fabrication for a new loader; repair for a customer-furnished used loader, with tax on segregated parts or the entire unsegregated charge.
State
CA
Ruling
Annotation 315.0420
Tax type
Sales and Use Tax
Issued
1951-08-01
Issued by
California State Board of Equalization
Requested by
A business converting a transport loader from hydraulic to mechanical operation
Topics
conversion mechanicals repair parts fabrication
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1951. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1951
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This 1951 opinion applied historical Rulings 15 and 26 and distinguished a new loader from a used loader furnished by the customer. For used property, its result depended on segregating substantial repair-part charges from repair labor in books and records. Current equipment-conversion, new-versus-used-property, repair, fabrication, parts, invoice, and recordkeeping rules control today.
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 said converting a new transport loader from hydraulic to mechanical operation was a step in producing the desired equipment, so tax applied to the entire charge.

Converting a customer-furnished used loader was repair. If the business separated repair parts and other tangible property from repair labor in its books and records, tax applied only to the retail selling price of the property furnished. Without segregation, the entire charge was presumed to represent property and was taxable.

Common questions

Was conversion of a new loader repair?

No.

Was conversion of a used loader repair?

Yes, under the source's facts.

What if parts and labor were not segregated?

The entire charge was taxable.

Citations and references

  • Historical Sales and Use Tax Rulings 15 and 26

Source

Original ruling text

315.0420

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 1, 1951

E--- Corporation
P.O. Box XXX
--- --- --- XX, --C-XXXXX

Gentlemen:
This is in answer to your letter of June 8 with respect to the application of the California sales or use tax to your charge for converting for the H--- S--- Corporation a transport loader from hydraulic to mechanical operation. If the loader was a new piece of equipment its conversion would be regarded as a step in the production of the particular type of loader desired, and the tax would apply to your entire charge. See Sales and Use Tax Ruling 15, copy enclosed. If the loader is a used loader furnished to you by your customer the operation would be regarded in the nature of a repair operation, the application of the tax thereto being governed by Sales and Use Tax Ruling 26, copy enclosed. If the charges for repair parts and other tangible personal property are segregated in your books and records from your charges for the repair labor the tax will apply only with respect to the retail sales price of the property furnished. If no such segregation is made it will be presumed that the entire charge represents the sales price of the property and the tax will apply to the entire charge. Very truly yours,

R. G. Hamlin
Tax Counsel

RGH:ja

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