Did fishing-vessel owners resell beer, wine, and other nonfood supplies when all crew members repaid equal shares of the voyage's grocery cost?

Plain-English summary

On the described fishing vessel, three owners and nine hired crew members consumed food and other supplies while at sea. The total grocery expense was divided equally among all twelve people and charged against each person's share of the voyage, without regard to which items or how much each person actually consumed.

California concluded that the vessel owners were not reselling beer, wine, or other nonfood items to the crew. The arrangement resembled one person buying supplies as agent for a group and receiving proportional reimbursement from the others.

Because the owners bought the nonfood items for themselves and as purchasing agents for the crew—not for resale—the supplier's sale to the owners was a taxable retail sale.

Common questions

Did reimbursement by the crew create a resale?

No. Equal cost sharing made the owners purchasing agents for the group rather than retailers selling particular items to individual crew members.

Who owed tax on the retail transaction described in the letter?

The source treated the supplier's sale of nonfood items to the vessel owners as the taxable retail sale.

Did the opinion decide the tax treatment of food?

No. The stated inquiry and conclusion concerned beer, wine, and other nonfood items.

Citations and references

• No numbered statute, regulation, or case citation appears in the official source

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/495-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/495-0960.pdf

Original ruling text

495.0960

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
September 5, 1952

Gentlemen:
This is in reply to your letter of August 7 concerning the application of sales tax to the sale of beer, wine, and other non-food items for consumption by crews of fishing vessels while at sea. You state that on a typical fishing vessel the crew consists of the three owners and nine hired crewmen. The total grocery expense for food and other items consumed by the twelve men while at sea is divided by twelve. This amount is then charged against each man's share from the voyage. Each man pays the same amount without regard to the value or cost price of items actually consumed by him. It is our opinion that the owners of the boat should not be regarded as reselling these items to the members of the crew. The transaction appears instead to be analogous to a situation whereby A, B, and C are going on a picnic and they agree that A will buy the beer and that B and C will pay A one-third of the cost of the beer. In such a case A is acting as agent for B and C in purchasing this beer for them and A is not regarded as selling the beer to B and C. Accordingly, it is our opinion that the sale of non-food items to the owners of the fishing vessel is a taxable retail sale and not a sale for the purpose of resale. Yours very truly,

W. W. Mangels
Assistant Counsel

Retyped 8/15/03 by Debbie Self