Were a manufacturer's leased signs taxable as fixtures when attached to a building, and how were pole signs embedded in the ground treated?

Plain-English summary

K--- D--- challenged the Board's two-way treatment of its manufactured/leased signs. Its April 2 request went through the Downey office; counsel sent conclusions there May 1, then misplaced a note after the office asked for a direct reply. Neither earlier writing is supplied.

Effective December 16, 1971, amended section 6016.3 included leased fixtures in tangible personal property when the lessor could remove them on breach/termination and was not also lessor of the attached realty. A 1964 annotation—absent here—classified a building/wall/roof-attached sign as a fixture, so rent was taxable under those stated conditions.

A pole sign firmly embedded in ground concrete was attached to realty, not the building, and was treated as a real-property lease. Tax applied to material cost instead of rent. The live annotation additionally invokes Regulation 1521 and says cost included materials fabricating the sign and erecting its pole; the supporting letter itself does not contain those added details.

Before the amendment, section 6016.3 reportedly treated any attached property as tangible personal property under the removal/non-realty-lessor conditions, not only fixtures. Counsel acknowledged the state might collect more by retaining that treatment, but said the Legislature narrowed the category.

No sign lease, attachment/removal evidence, rent/material invoices, tax record, audit or later outcome is supplied. The live annotation also prints 7/2/93; the PDF's formal heading and continuation page say July 2, 1973, so the body controls.

Common questions

Was every sign attached to land taxed on rent?

No. The opinion treated a building-wall or roof sign as a fixture but a pole sign embedded in concrete as real property.

What conditions made building-sign rent taxable?

The sign lessor had the right to remove the fixture upon breach or termination and was not the lessor of the realty to which it was attached.

How was the embedded pole sign taxed?

Tax applied to the material cost, not the rental receipts, under the opinion's real-property treatment.

Why did the 1971 amendment matter?

It reportedly narrowed attached tangible property from any removable property to removable fixtures under the same realty-lessor limit.

Does the supporting letter cite Regulation 1521?

No. That regulation and the expanded sign/pole material statement appear only in the live annotation.

Was the opinion issued in 1973 or 1993?

The formal PDF body twice says July 2, 1973. The live entry's 7/2/93 conflicts and is disclosed rather than used.

Are the actual signs, leases or tax records available?

No. The source gives the classification but not the underlying documents or later outcome.

Citations and references

• Section 6016.3 — pre/post-December 16, 1971 attached-property/fixture distinction
• California Tax Service Annotation 190.0560 (1964) — attachment classification cited but absent
• April 2 request, May 1 response and sign/lease/tax records — absent
• July 2, 1973 Rigby letter — amended-law fixture/realty classification
• Official Annotation 330.2308 — adds Regulation 1521/material detail and conflicting 7/2/93

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2308
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2308.pdf

Original ruling text

STATE OF CALIFORNIA

330.2308

STATE BOARD OF EQUALIZATION

July 2, 1973

Mr. J--- -. K--Vice President
K--- D--- Inc.
XXXXX --- Avenue
--- --- ---, CA XXXXX
Dear Mr. K--Re:

SS – XX XXXXXX

Your letter of April 2, 1973 was referred to the legal staff by Mr. K--- of our Downey office for review. On May 1, 1973 we wrote to Mr. K--- setting forth our conclusions. Shortly thereafter, he called and requested I write directly to you. Unfortunately, the note I made regarding this matter was misplaced and until just recently I had forgotten to write to you. Please accept my apologies for the delay. As you are aware, it is the Board’s position that effective December 16, 1971 if a sign that is manufactured by the lessor is attached to a building, wall, or roof of a building it is considered to be tangible personal property and tax applies to the rental receipts. On the other hand, if the sign is firmly attached to the realty; namely, a pole sign embedded in concrete in the ground, it will be treated as a lease of real property and tax will apply to the material cost. You question the propriety of this conclusion. For the reasons set forth below, we are of the opinion that the foregoing position is correct. Effective December 16, 1971, Section 6016.3 was amended to provide that tangible personal property included leased fixtures if the lessor had the right to remove the fixture upon breech or termination and he was not the lessor of the realty to which the property was attached. Due to this amendment, we were faced with the problem of whether signs such as the ones you lease were or were not fixtures. In researching this matter we found that in 1964 we concluded that the determining point as to whether or not a sign was or was not a fixture depended upon whether it was attached to the building or to the realty (California Tax Service Annotation 190.0560). After due consideration it was decided to accept this classification in regard to the 1971 amendment. As you point out prior to December 16, 1971 we had taken the position that the signs that you leased were tangible personal property. However, this was based upon the wording of Section 6016.3 as it read prior to December 16, 1971. At that time it

Mr. J--- -. K--S- -- XX XXXXXX

-2-

July 2, 1973
330.2308

provided that tangible personal property included any (as distinguished from just fixtures) property that was attached to the realty where the lessor had the right to remove the property unless he was the lessor of the realty to which the property was attached. Although the state might possibly receive more money in the long run if the signs you lease were still treated as tangible personal property, the Legislature by amending Section 6016.3 saw fit to limit the classification of tangible personal property affixed to realty to fixtures rather than just any property affixed to the realty. If you have any further questions regarding this matter, please feel free to contact us direct. Very truly yours, Glenn L. Rigby Tax Counsel