Did a 1955 California letter tax reverse processing of customer-furnished color film?

Plain-English summary

The June 29, 1955 letter addressed color film developed to a negative and then reversed into a positive. It said ordinary film was mounted and returned, while motion-picture film was wound and returned.

The letter treated that reverse-processing method as taxable fabrication of customer-furnished property. The entire charge was taxable whether or not the processor itemized its work.

The letter distinguished a process using separate positive and negative film. For that different method, it said tax did not apply to a separately stated negative-development charge. The source supplies no allocation, amount, example or facts showing that the taxpayer used the alternate method.

Live annotation and source posture

The current live annotation accurately preserves the core conclusion that negative-to-positive reverse processing is fabrication of customer-furnished property and that the entire charge is taxable. It does not say that the letter reached that result whether or not the charge was itemized, or preserve the separate positive-and-negative method whose separately stated negative-development charge was treated differently.

The source invokes historical Ruling 15 and says a copy was enclosed. The one-page official PDF contains only the letter, so the rule's own text and any qualifications are unavailable here. The inquiry is also absent and undated. No taxpayer identity, film sample, process specification, contract, invoice, itemized charge, return, audit, assessment, refund or applied outcome is supplied.

The official PDF visibly prints light weight real in the motion-picture sentence. This page does not silently replace the source wording with reel; the image confirms it is a source typo rather than an extraction error.

CDTFA's Annotated Legal Opinions collection says these letters are summarized as annotations and statutory law controls over an inconsistent annotation. The PDF has a clean native text layer and one page-one letterhead stencil, so no OCR was required. Two fresh direct PDF downloads and two live-page downloads were byte-identical; duplicate default text extractions also matched.

What this means for you

Do not use the letter's alternate branch merely because a bill has separate lines. The source tied that branch to a different process using separate positive and negative film and supplied no allocation example. Identify the actual process and current governing rule.

Common questions

Q: What did the letter call taxable fabrication?

A: Developing customer-furnished color film to a negative and reversing it into a positive.

Q: Did itemizing the reverse-processing charge change the result?

A: No. The letter said the entire charge was taxable whether or not itemized.

Q: What alternate process did the letter distinguish?

A: A process using separate positive and negative film, for which it treated a separately stated charge to develop the negative as nontaxable.

Q: Can the text of historical Ruling 15 be checked in this source?

A: No. The letter says a copy was enclosed, but the official PDF does not include it.

Missing evidence and references

• Taxpayer inquiry and identity — absent
• Historical Ruling 15 enclosure — cited but absent
• Film samples, process specifications and customer-return records — implicated but absent
• Contracts, invoices and itemized-charge records — implicated but absent
• Tax returns, audits, assessments, refunds and later outcomes — not supplied

Verbatim support

From the official June 29, 1955 Associate Tax Counsel letter:

In the type of film you handle, the method is to develop the film to a negative and reverse it into a positive.

In both cases, the entire charge is taxable, whether or not itemized.

The developing of film by the reverse processing method is regarded as fabrication of customer furnished property and is therefore taxable under Ruling 15, copy enclosed.

This is to be distinguished from the development of film by the use of a separate positive and negative, in which case tax does not apply to a separately stated charge for development of the negative.

Citations and references

• Historical California Sales and Use Taxes Ruling 15 — cited enclosure absent

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Live annotation: Annotation 420.0660
• Original supporting opinion: 420.0660 PDF

Original ruling text

STATE OF CALIFORNIA

420.0660

STATE BOARD OF EQUALIZATION
June 29, 1955

Gentlemen:
You inquire concerning the application of sales tax to the processing of color film. In the type of film you handle, the method is to develop the film to a negative and reverse it into a positive. If it is ordinary film, it is then placed in a mount and returned to the customer. If it is motion picture film, it is wound on a light weight real and returned to the customer. In both cases, the entire charge is taxable, whether or not itemized. The developing of film by the reverse processing method is regarded as fabrication of customer furnished property and is therefore taxable under Ruling 15, copy enclosed. This is to be distinguished from the development of film by the use of a separate positive and negative, in which case tax does not apply to a separately stated charge for development of the negative. Very truly yours,

Bill Holden
Associate Tax Counsel
BH:tj