Did leasing a replacement chassis become taxable when the lessee moved an old truck body onto it?

Plain-English summary

The Board could not locate a redacted correspondent's earlier correspondence. An absent July 28, 1966 letter restated an agreement between a corporation and its 100% individual owner. Trucks and bodies were bought separately because bodies reportedly lasted two to three times as long, and quoted 4% “sales taxes” were paid at purchase. The individual owned and leased to the corporation.

Counsel did not treat each step as proved. The response assumed a first truck rented with its body; when it wore out, another chassis rented without a body; and the corporation detached the old body and attached it to the replacement. Attachment was further assumed relatively simple, easy and free of significant fabrication labor by the corporation.

Only under substantially those circumstances did Counsel conclude that the individual leased the replacement in substantially the same form acquired. Live Annotation 330.4080 publishes that conclusion and says no additional tax applied, but omits the missing correspondence, conditional assumptions, 100% ownership, two-to-three-times useful life and 4% acquisition-tax statement.

The source prints the request date as “July 28, 19661,” without an accompanying footnote, and contains several grammatical/OCR-like artifacts; the original text remains unchanged. Neither official source cites numbered law or includes the parties, agreement, property, invoices/tax proof, work, rents, returns, audit or later outcome.

Common questions

Who moved the truck body?

The lessee corporation detached the body from the worn chassis and attached it to the replacement chassis.

Was that transfer documented?

No. Counsel expressly framed it as an assumption from the absent request.

Why did the opinion find no substantial change by the lessor?

The lessor rented the replacement chassis as acquired, while the lessee performed the assumed simple body transfer.

What acquisition tax did the source state?

Quoted 4% “sales taxes” on trucks and bodies, but no invoice or payment record appears.

What fact could change the result?

The source expressly assumes that attaching the body is easy and requires no significant fabrication labor.

What other facts were assumed?

That the first truck was leased with a body, the worn unit was replaced by a bodyless chassis, and the corporate lessee performed the transfer.

Was a final return or assessment shown?

No. The letter gives conditional advice without reporting, audit or later outcome.

Citations and references

• No numbered statute, regulation, or case citation appears in the supporting opinion.
• July 28, 1966 request and earlier correspondence — referenced but absent
• Lease agreement — referenced but absent
• Live Annotation 330.4080 — same-form/no-additional-tax conclusion dated August 8, 1966
• Parties, property/purchases/tax, work, leases/rent, returns/audit and outcome — absent

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: Annotation 330.4080
• Original supporting opinion: 330.4080 PDF

Original ruling text

330.4080

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

August 8, 1966

This is in reply to your letter of July 28, 19661 regarding the, taxability of a leasing agreement. We are unable to find the correspondence which you earlier sent us. Your letter states the following fact situation: The agreement is between a corporation and an individual. The individual is 100 per cent owner of the corporation. The lease agreement is for trucks with bodies. The truck bodies have two to three times the life of the truck. Trucks and truck bodies are purchased separately because of the difference in life. The corporation will transfer truck bodies from old trucks to new trucks. The individual is the owner and leases to the corporation. All sales taxes of 4 per cent are paid at the time of purchase. From this statement, we assume that the first truck is rented to the corporation with the body, and when it wears out, another chassis is rented to the corporation without a body. The corporation then detaches the body from the old chassis and attaches it to the new chassis. If this is substantially the circumstances I then we conclude that the individual lessor is leasing property in substantially the same form as he acquired it. We are also assuming that the attachment of a body to a truck is a relatively simple and easily performed task which does not require any significant fabrication labor on the part of the corporation. If you have any further questions I please do not hesitate to write to us again.

Very truly yours,

Philip R. Dougherty
Associate Tax Counsel

PRD:dse
cc: Long Beach - Subdistrict Administrator