Under the historical rule, when could a lessor bring formerly out-of-state leased property into its California operations without use tax?

Plain-English summary

Hennessy said another variation on Jugum's Z--- letter (Annotation 330.2290) again produced no-tax recommendation under advice given for years. He sought approval to delete Annotations 570.1120/1140/1520 and add current treatment directing questions to him. Those source texts, variation and prior memo are absent.

Proposed annotation: lessor buys tangible property for resale inside/outside California, first lease occurs outside state, then after termination lessor brings it to own California operations—not another lessee.

Outside-bought property produced no use tax on later operational use if it did not enter California within 90 days of out-of-state lease start. California-bought property produced no tax if it did not reenter until after six months from lease start, citing section 6009.1.

A boxed later note adds footnote None of which constitutes Mobile Transportation Equipment to prevent misreading and is marked DHL 5/7/97. Fresh rendered PDF confirms slashed date; text extraction prints 57/97. No supporting analysis appears.

Memo says after approval it would enter next Current Legal Digest being prepared with Susan; no approval/digest included. Live 330.2530 publishes proposed language with MTE exclusion, confirming adoption but not missing approval record.

Common questions

Did rule cover second California lease?

No. The proposed annotation concerned the lessor bringing the property back for its own California operations.

Was timing same for in-state and out-of-state purchases?

No. The memorandum used more than 90 days for property bought outside California and more than six months for property bought inside California.

Did it cover mobile transportation equipment?

No. Boxed 1997 clarification and live annotation expressly excluded it.

Was proposed annotation approved?

PDF omits approval and digest, but live official collection publishes language including MTE limitation.

Why is note date shown as 5/7/97?

Rendered PDF visibly shows DHL 5/7/97; plain-text extraction drops slash as 57/97.

Were older annotations' contents preserved here?

No. Memo names three requested deletions but does not reproduce their text.

Can 1988 timing rules be assumed current?

No. The memorandum applied historical statutes and should be checked against current law before use.

May taxpayer rely on this internal memo?

No. It is historical editorial proposal with missing authority chain and later unexplained limitation; current law and exact facts must be verified.

Citations and references

• Former section 6009.1 — California-purchase six-month branch
• Annotation 330.2290 — absent Z--- letter
• Annotations 570.1120/1140/1520 — requested deletions; texts absent
• Prior variation/memo/advice and approval/Current Legal Digest — absent
• Boxed DHL 5/7/97 note — MTE exclusion without analysis
• Official Annotation 330.2530 — published proposed rule with exclusion

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.2530
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/330-2530.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

Mr. Gary J. Jugum

From:

Donald J. Hennessy

Subject:

New Annotation

330.2530

March 17, 1988

We recently again tangled with another variation on your “Z---” letter (Annotation 330.2290). We recommended that the tax not apply based on the advice we have given during the last few years. I wish to annotate this memorandum of mine to you, thereby giving such advice a current treatment and directing any questions to me. I request your approval to delete annotations 570.1120, 570.1140, and 570.1520, and then add a new annotation stating as follows: “Out-of-State Use of Leased Property. A lessor purchases tangible personal property* for resale from suppliers both inside and outside California. The first lease is at a location outside California. Following termination of this first lease, the lessor brings the property into California, not for lease to another lessee, but for use in the lessor’s own operations in California. “If the property was purchased by the lessor outside California, and does not enter California within 90 days of the start of the out-of-state lease, the lessor’s use of the property in the lessor’s own operations in California is not subject to use tax. “If the property was purchased by the lessor inside California, and did not reenter California until after six months from the start of the out-of-state lease (Section 6009.1), the lessor’s use of the property in the lessor’s own operations in California is not subject to use tax.”

*None of
which
constitutes
Mobile
Transportation
Equipment.
This will be
added to
ensure no one
misinterprets
the intent of
the annotation.
DHL 57/97

On receiving your approval, I will include this in the next Current Legal Digest, which Susan and I are now putting together. DJH:sr