Did California's leased-freight-car exemption depend on whether the lessee was a shipper or railroad, when the car entered California, or its days in the state?
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This page answers the general question as of 1964. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
Tax counsel read section 6368.5 to exempt a leased rail freight car from California sales and use tax when the car was principally used in interstate transportation.
The result did not change based on whether the lessee was a shipper or a railroad, when the freight car first entered California, or how many days it spent in California. Principal interstate use was the stated condition.
The letter said an unidentified Union Oil Company case predated section 6368.5. Its next sentence literally says the case "is not on appeal" in the U.S. Supreme Court and "is not, therefore, final." Because those clauses are internally inconsistent and the source gives no case citation, this page does not attempt to repair or rely on that statement.
The February 5 request, lease, freight-car and lessee identities, routes, mileage, entry dates, California days, principal-use calculation, and applied tax result are absent. The live annotation repeats only the section 6368.5 conclusion and omits the case uncertainty and evidentiary limits.
Common questions
Did it matter whether a shipper or railroad leased the car?
No under the letter's reading. Either lessee category could qualify if the leased rail freight car was principally used in interstate transportation.
Did first California entry or time in the state control?
No. Counsel expressly said the entry date and number of California days did not change the exemption, while leaving principal interstate use as the condition.
How was principal use measured?
The source does not say. It supplies no statute text, mileage, routes, days, loads, calculation method, or records applying the term.
What was the Union Oil case?
It cannot be identified from this source. The letter supplies no case name beyond the company, citation, opinion, or docket and contains an internally inconsistent appeal-status sentence.
Is there an applied exemption result?
No particular car, lease, lessee, tax amount, audit, assessment, claim, appeal, or later outcome is supplied.
Citations and references
- California Sales and Use Tax Law section 6368.5 — cited for the leased interstate freight-car exemption; complete authority, definitions, measurement and proof rules, amendments, later history, and current law not supplied
- Unidentified Union Oil Company case — no citation, opinion, docket, facts, holding, actual appeal status, procedural history, or later treatment supplied, and the source's status sentence is internally inconsistent
- February 5 request and March 12 response — no request, car, lease, use, tax, audit, assessment, claim, appeal, or later outcome records supplied
- Official Annotation 325.0100's historical conclusion and date — omits provenance, case uncertainty, missing records, applied outcome, and reliance status and supplies no additional freight-car record
Source
- Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
- Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/325-0000-all.html
- Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/325-0100.pdf
Original ruling text
325.0100
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
March 12, 1964
--- --- ----- --- ----- --- --Dear Mr. “C”
This is in reply to your letter of February 5, 1964, written at the suggestion of W. T. Denny, Chief of Field Operations. It is our opinion that Section 6368.5 of the Sales and Use Tax Law exempts from the California sales and use taxes any leased rail freight car which is principally used in interstate transportation whether the lessee is a shipper or a railroad, and without regard to when the car first enters California, or to the number of days the car spends in California. The Union Oil Company case which you mention arose prior to the enactment of Section 6368.5. Moreover, the case is not on appeal in the United States Supreme Court and is not, therefore, final. Very truly yours,
E. H. Stetson
Tax Counsel
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