Which inputs used to grow nursery stock for resale were exempt from California sales and use tax?

Plain-English summary

California exempted seeds, annual plants, and qualifying fertilizer bought to produce and grow nursery stock for resale.

Nonannual plants also qualified when the nursery bought the plants themselves for resale and did not first use them for flower production or another purpose. Nonreturnable containers were exempt when the nursery placed stock in them and sold the stock together with the container.

Other items bought for use in producing or growing nursery stock remained taxable.

Common questions

Were seeds, annual plants, and fertilizer exempt?

Yes, under the historical source's resale-production facts.

Were nonannual plants exempt?

Only if purchased for resale without prior use.

Were nonreturnable containers exempt?

Yes, when sold together with the nursery stock.

Citations and references

• Historical California Revenue and Taxation Code § 6385
• Historical Sales and Use Tax Rulings 48 and 49

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/510-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/510-0120.pdf

Original ruling text

510.0120

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

June 19, 1950

D--- Distributors, Inc.
XXXX D--- Dr.
--- ---, California
Attention:

Mr. F. D. T---, Controller
Re:

x XXXXX

This is in reply to your letter of June 9, 1950, inquiring as to the exemption from sales and use taxes of items which enter into production and growth of nursery stock for resale. Under Section 6385 of the Sales and Use Tax Law and the related Sales and Use Tax Ruling 48, copies of which are enclosed, the sale to you of seeds, annual plants, and fertilizer to produce and grow nursery stock for resale would be exempt from sales and use taxes. Sales of nonannual plants to you are also exempt from such taxes if the plants themselves are purchased by you for resale and are not used prior to resale for flower production or otherwise. “Commercial fertilizers”, “agricultural minerals”, and “manures” are considered to be “fertilizer”. Nonreturnable containers purchased by you are not taxable if you place nursery stock in such containers and sell the stock together with the container. Sales and Use Tax Ruling 49 is enclosed for your information as to other types of containers and labels. All other items which you may purchase for use in the production and growing of nursery stock for resale are subject to sales tax or use tax. If you wish information as to any specific purchase a member of the staff at our District Office, 357 South Hill Street, Los Angeles California, telephone number Madison 6-6381, will be glad to consult with you concerning it. Very truly yours,

E. H. Stetson
Tax Counsel

cc:

Wm . R. Thomson