Were an estate's liquidation sales exempt because the testator had not operated a related business during life?

Plain-English summary

Executors or administrators had made and planned unidentified estate liquidation sales. Board counsel concluded that the sales were sufficient in number, scope, and character to require a seller's permit, although the letter gives no items, count, dates, amounts, or buyers.

The sales were not exempt occasional sales under sections 6006.5 and 6367 merely because they liquidated an estate or were unrelated to a business the decedent had operated during life. Gross receipts from consumer sales were taxable.

Sales to dealers, liquidators, or others purchasing for resale were excepted from that conclusion, but the source supplies no resale records.

Incoming request, missing bulletin, unquantified series, and source limits

Tax Counsel E. H. Stetson wrote to unidentified addressees on October 24, 1952 in reply to their October 20 letter. The year of the incoming letter is not printed. The response was copied to the Santa Barbara Tax Administrator, but the source does not say that office sent the request or identify the estate, fiduciaries, testator, property, or proceedings.

Stetson said he was enclosing Sales Tax General Bulletin 52-6 concerning sales by executors and administrators. The rendered official page breaks the number between lines as 52- and 6; its Adobe Paper Capture text layer, preserved below, collapses that reference to 526. The bulletin itself is not in the one-page PDF, so its text, date, status, and application cannot be reviewed from this source. The page also begins with the unexplained header 1632 Liquidation sale by executors and administrators assets.

The absent October 20 letter apparently described sales already made and additional sales to be made. Stetson called them clearly sufficient to accrue sales-tax liability except for sales to dealers, liquidators, or others for resale. He said estate liquidation and the lack of a connected business conducted by the testator during life did not change the character of actual consumer sales when the transactions themselves required a seller's permit.

Sections 6006.5 and 6367 supplied the occasional-sale exemption. Stetson concluded that the sales were sufficient in number, scope, and character to require a permit and therefore failed the proviso in section 6006.5(a). Gross receipts from consumer sales were subject to sales tax under that historical advice. The source does not state the threshold applied, exact transaction universe, audit or filing period, valuation, tax rate, gross receipts, or accrued liability.

The PDF omits the October 20 request; General Bulletin 52-6; estate, probate, executor or administrator, and testator identities; inventory and appraisal; authority to sell; advertising, auction, dealer, and liquidator agreements; transaction list, dates, prices, invoices, and buyer identities; resale certificates and dealer status; permits and returns; audit, assessment, payment, refund, correspondence, appeal, and outcome. It gives no basis to classify any particular sale as consumer or resale.

The live annotation preserves the executor-and-administrator setting, liquidation-sales characterization, absence of a related lifetime business, permit-requiring condition, and non-occasional conclusion. It omits the October 20 request and its unstated year; Sales Tax General Bulletin 52-6 enclosure; unexplained 1632 header; sales made and planned; consumer gross-receipts rule; dealer, liquidator, and other-resale-buyer exception; sections 6006.5(a) and 6367; Santa Barbara copy recipient; unquantified sales and missing records; and outcome gap.

What this means for you

Executors and estate administrators

Estate status did not automatically make a series of liquidation sales occasional. Under this historical letter, the number, scope, and character of the fiduciary's own selling activity controlled.

Accountants and tax professionals

Separate consumer sales from documented resale transactions and evaluate both completed and planned estate sales collectively for permit requirements. Retain resale certificates and dealer or liquidator records.

Common questions

Q: Did it matter that the decedent had not operated a related business?
A: No.

Q: Why were consumer sales taxable?
A: The sales themselves formed a permit-requiring series.

Q: Were resale transactions treated the same way?
A: No. Sales to dealers, liquidators, or other resale buyers were excluded.

Q: Does the letter state the exact sales count?
A: No.

Q: Does it identify the property or sale amounts?

A: No. The estate assets, transaction dates, prices, buyers, and total receipts are absent.

Q: Is General Bulletin 52-6 included?

A: No. The letter says a copy was enclosed, but the official PDF contains only the response page.

Q: Why does the original text below show 526?

A: The rendered PDF prints 52- at one line's end and 6 at the next line's start; the official Paper Capture text layer collapses the line break and hyphen.

Q: Does the source show the assessed or paid tax?

A: No. It gives staff advice but no computation, return, assessment, payment, appeal, or later outcome.

Citations and references

• California Revenue and Taxation Code §§ 6006.5(a) and 6367
• California Sales Tax General Bulletin 52-6 — cited and said to be enclosed, but not included
• October 20 incoming request — identified but not included; year not stated
• Estate, probate, inventory, sale, buyer, resale, permit, tax, assessment, and outcome records — described or implicated but not included
• Santa Barbara Tax Administrator — copy recipient

Verbatim support

From the official October 24, 1952 E. H. Stetson letter:

It is our opinion that the sales mentioned in your letter are clearly sufficient to result in the accrual of sales tax liability, except as to those sales made to dealers, liquidators, or others for the purpose of resale.

The fact that the sales are liquidation sales and not connected with a business carried on by a testator during his lifetime does not, in our opinion, affect the character of the actual sales made if sufficient in themselves to require the holding of a seller’s permit and payment of sales tax on gross receipts from sales made to consumers.

As we have indicated, we believe the sales made and to be made are sufficient in number, scope, and character to require the holding of a seller’s permit and, hence, are not occasional sales by the proviso in Paragraph (a) of Section 6006.5.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 395.0880
• Original supporting opinion: 395.0880 PDF

Original ruling text

1632 Liquidation sale by executors and administrators assets
395.0880

October 24, 1952

Gentlemen:
We are enclosing in answer to your letter of October 20 a copy of Sales Tax General Bulletin 526 dealing with sales by executors and administrators. It is our opinion that the sales mentioned in your 1etter are clearly sufficient to result in the accrual of sales tax liability, except as to those sales made to dealers, liquidators, or others for the purpose of resale. The fact that the sales are liquidation sales and not connected with a business carried on by a testator during his lifetime does not, in our opinion, affect the character of' the actual sales made if sufficient in themselves to require the holding of a seller’s permit and payment of sales tax on gross receipts from sales made to consumers. We do not believe that such sales fall within the exemption of occasional sales pursuant to Sections 6006.5 and 6367 of the Revenue and Taxation Code. As we have indicated, we believe the sales made and to be made are sufficient in number, scope, and character to require the holding of a seller’s permit and, hence, are not occasional sales by the proviso in Paragraph (a) of Section 6006.5.

Very truly yours

E. H. Stetson
Tax Counsel

EHS:ph
cc: Santa Barbara - Tax Administrator