Were timber-tree seeds and seedlings exempt when bought solely to grow trees for harvest and sale?

Plain-English summary

California exempted timber-tree seeds sold solely to produce trees that would be harvested and sold. It also treated commercial timber seedlings as resale inputs because they became part of the mature trees sold as timber.

The exemption did not apply if the trees had another specific intervening use before harvest, such as soil-erosion prevention, seed production, or recreational facilities. The official annotation says merely incidental beneficial effects did not by themselves create tax.

Common questions

Were timber seeds exempt?

Yes, when bought solely to grow timber for harvest and sale.

Were nonannual timber seedlings also exempt?

Yes, as property incorporated into the trees sold.

What kind of additional use made the purchase taxable?

A specific intervening use such as erosion control, seed production, or recreation.

Citations and references

• California Revenue and Taxation Code § 6358(c) (official annotation page)
• Historical Sales and Use Tax Ruling 48

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/510-0220.pdf

Original ruling text

510.0220

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

April 1, 1966

R--- R--- Co.
P. O. Box XXX
--- ---, CA XXXXX
Attention:

Mr. C--- L. H--Office Manager

SR --- XX XXXXXX

Gentlemen:
This is in reply to your letter of March 23, 1966.
Under ruling 48, tax does not apply to sales of seeds and annual plants the products of which are to be sold in the regular course of business. Under this ruling, sales of seeds for timber trees to a purchaser solely for the purpose of producing trees which are harvested as timber are exempt from sales tax. Although seedlings of commercial timber trees are not annual plants, they become part of mature trees which are harvested and sold. It is therefore our opinion that sales of seedlings to a purchaser solely for the purpose of producing trees to be harvested and sold as timber are exempt sales for resale. If the trees produced from such seeds or seedlings are subjected to some intervening use prior to harvesting, such as for the purpose of soil erosion prevention, seed production, or creation of recreational facilities, the sale of such seeds or seedlings would be subject to sales tax. Very truly yours,

George A. Trigueros
Associate Tax Counsel

GAT:em
cc:

--- --- – District Administrator