Was a municipal utility district's infrequent sale of a complete electrical line exempt as an occasional sale?

Plain-English summary

A municipal utility district proposed to sell a complete "Fringe Line" consisting of 56 poles, crossarms, insulators, and conductors to a utility company. The district held a seller's permit and also made miscellaneous sales, including interests in joint poles. Its last complete-line sale had been several years earlier.

The Board concluded that the line sale was taxable rather than an exempt occasional sale. Even if the property itself had not been held or used in an activity requiring a seller's permit, this transaction belonged to a series of sales that the Board considered sufficient to constitute a permit-requiring selling activity.

The infrequency of complete-line sales did not isolate the transaction from the district's broader equipment-sale activity.

What this means for you

Municipal utilities, public districts, equipment buyers, and tax professionals

Review the seller's entire pattern of tangible-property sales, not just how often it sells the exact asset type. Existing permit status and recurring miscellaneous sales can defeat occasional-sale treatment.

Common questions

Q: Did the long gap since the last complete-line sale make this sale occasional?

A: No. The Board considered the district's broader series of miscellaneous sales.

Q: Did the district already hold a seller's permit?

A: Yes, and the opinion treated its sales activity as sufficient to require one.

Q: What property was sold?

A: A 56-pole electrical line with crossarms, insulators, and conductors.

Citations and references

• Former California Revenue and Taxation Code § 6006.5, as cited in the opinion

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 530.0200
• Original supporting opinion: 530.0200 PDF

Original ruling text

530.0200

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
August 10, 1953
Your letter of August 6

Attention:

______
Valuation Engineer

Gentlemen:
You have inquired concerning the applicability of the California retail sales tax with respect to the sale of a “Fringe Line” consisting of 56 poles together with crossarms, insulators, and conductors to Pacific Gas & Electric Company. The district holds a seller’s permit under the Sales and Use Tax Law and makes miscellaneous sales including sales of interests in joint poles. You point out that sales of complete lines are infrequent, the last such sale being in 1948-9. It is our opinion, nevertheless, that the sale in question is taxable. It does not appear that it can be regarded as an exempt occasional sale under Section 6006.5 of the Sales and Use Tax Law. Although perhaps meeting the first requirements set forth therein as a sale of property not held or used in an activity requiring the holding of a seller’s permit, it appears not to meet the second requirement in that it is one of a series of sales sufficient in our opinion to constitute an activity requiring the holding of a seller’s permit. Yours very truly,

E. H. Stetson
Tax Counsel