Ezel / Tax Rulings / CA

Could a yeast manufacturer buy molasses for resale when yeast cells consumed its sugar while growing and multiplying?

Short answer Yes. The sugar fed cell growth and everything entering a yeast cell came from the sugar or water, so molasses was treated as incorporated into the yeast.
State
CA
Ruling
Annotation 440.2040
Tax type
Sales and Use Tax
Issued
1987-05-14
Issued by
California State Board of Equalization
Requested by
Board audit staff asking about molasses sold to a yeast manufacturer
Topics
yeast reproduction ingredient component parts resale exemption
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1987. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1987
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a California State Board of Equalization legal memorandum dated May 14, 1987, published by CDTFA as support for an annotation carrying July 7, 1952 metadata; the source-document date is used here. It relies on the stated biological process in which molasses sugar feeds yeast-cell growth and becomes cell material. Another taxpayer should not treat it as binding and should check current fermentation, yeast, nutrient, ingredient, component-part, resale, and sales-and-use-tax rules. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

Board audit staff asked about molasses sold to a yeast manufacturer. In the described growth and reproduction process, sugar from molasses was the food on which yeast cells lived, grew, and multiplied, and material entering a yeast cell came from sugar or water.

The molasses therefore qualified as purchased for resale because its material became incorporated into the yeast produced.

CDTFA's annotation metadata dates the proposition July 7, 1952, but the complete supporting memorandum reproduced below is dated May 14, 1987. This page uses the source-document date.

Source

Original ruling text

State of California

Memorandum

To:

Mr. Burnett Sheehan (ESA:CHJ)

From:

E. H. Stetson (NBH)

Subject:

C--- Y--- Company

Board of Equalization

440.2040

May 14, 1987

Account No. - - XXXXX

  • XXXXX

This is in reply to your letter of May 13 concerning the application of tax to sales of molasses to the above taxpayer for use in the manufacture of yeast. As we understand the nature of the process of the growth and reproduction of yeast cells, the sugar in the molasses is the food on which the yeast cells live, grow and multiply. Everything which goes into a yeast cell comes from either the sugar or the water. Accordingly, it is our opinion that the molasses is purchased for the purpose of resale.

NBH:ja

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