Were individual and group fishing trips boat rentals, and how were separately leased galleys and tackle taxed when trips crossed California waters?

Plain-English summary

San Diego Auditing described operator D as selling sportfishing tickets to individuals, renting tackle for boat use and providing one-day group charters with boat, crew and free bait. Some boats operated entirely within a then-described three-mile limit; other trips were principally beyond it. All boats were acquired ex-tax.

An individual ticket was carriage, not a boat rental, when the passenger had no say/control over the fishing destination and the owner/employees kept possession, custody and license to use the boat. The letter also said ordinary group fishing charters to various destinations were carriage rather than leases, without supplying the actual charter agreement.

D separately leased boat galleys to concessionaires at five cents per passenger carried. Audit staff considered them taxable leases; counsel agreed but, under section 6006.1, taxed only rent attributable to boat time in California.

Tackle was rented onshore for use aboard boats. Counsel required the same in-state-time apportionment and assumed that tackle was bought ex-tax. The source supplies no apportionment method, logs or calculation.

No ticket, charter, route record, galley lease, tackle contract or audit outcome is published. Accordingly, the memorandum does not decide a bareboat charter, a group with different operational control, or property whose California time cannot be substantiated.

The live annotation publishes only individual tickets as carriage and in-state tackle rent as taxable. It omits ordinary group charters, boat/crew/free bait, all-boats-ex-tax, the galley lease/rate, trip categories, explicit section 6006.1 apportionment and missing records.

Common questions

Did buying an individual fishing ticket rent the boat?

No. It bought carriage.

Why was an individual ticket carriage?

Passengers did not choose/control the fishing destination, and possession, custody and boat use remained with the owner or employees.

Were ordinary group charters treated as leases?

No under the stated owner-and-crew control facts.

What did the group charter include?

A boat, crew and free bait for a one-day trip under the auditing office's description.

Were galley leases taxable?

Yes for the portion attributable to time the boat was in California.

What was the galley rent?

Five cents per passenger carried.

Were tackle rentals treated the same way?

Yes. Only California-attributable rental time was taxed.

Was tackle acquisition tax established?

No. Counsel expressly assumed the tackle was bought ex-tax.

How was California time calculated?

The letter supplies no method, logs or audit computation; it states only the section 6006.1 allocation rule.

Were actual charters or a final audit result supplied?

No. The memorandum answers described questions without contracts, calculation, return, assessment or appeal.

Citations and references

• Revenue and Taxation Code section 6006.1 — in-state-time allocation for galley/tackle rent
• December 11, 1967 San Diego Auditing memorandum — transactions/questions quoted; standalone memo absent
• Ticket, group-charter, route, galley/tackle lease and acquisition/tax records — absent
• February 15, 1968 counsel memorandum — carriage/apportionment answers without computation/outcome
• Official Annotation 330.2040 — individual-ticket/tackle result without group-charter/galley/source limits

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2040
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2040.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Diego - Auditing (WAS)

From:

Tax Counsel (GLR)

330.2040

Date:

February 15, 1968

Subject:

In your memo of December 11, 1967 you state that "D" is engaged in the following transactions: “A Providing sportfishing on a ticket basis to individuals. “B Furnishing tackle on a rental basis for use on boats. “C Providing group charter service including boat, crew and free bait for one day trips." The boats are engaged in activities both exclusively within the three-mile limit and on trips principally outside the three-mile limit. All boats were acquired on an ex-tax basis. You ask our opinion regarding the following questions:

1. "Are the charter trips within the definition of leases and subject to tax?"
   In those cases where the people merely purchase an individual ticket and do not have any say or control over where they will fish, it is our opinion that this constitutes contracts of carriage rather than rentals of tangible personal property. This is based on the fact that possession, custody and license to use the boat remains totally in the hands of the owner or his employees. Ordinarily, group charters of fishing boats for trips to various destinations constitutes contracts of carriage rather than leases of tangible personal property.
2. "Taxpayer leases galleys to concessionairs [sic]. Rental is 5 cents per
   passenger carried. We consider these taxable leases. Should the lease be exempt (or partially exempt) if a trip went outside territorial waters?"

We agree with your conclusion that the taxpayer is leasing the galleys. As set forth in Section 6006.1, only the rentals attributable to the time the boats are in this state will be subject to tax.

3. "Tackle is rented on shore for use on the boats ..• Should the rental be
   considered differently if the trip goes outside territorial waters?" The rentals should be apportioned as explained in Section 6006.1. Only those rentals attributed to the time that the tackle is in this state is subject to tax. We have assumed that the tackle was purchased ex tax.

GLR:kc [lb]