Was a breeding share giving an annual right to breed a mare to a stallion taxable tangible personal property?

Plain-English summary

The described breeding share gave its owner only the right to have a thoroughbred mare bred to a particular stallion once each breeding season without an additional charge.

Although fractional interests in tangible personal property could be taxable, the letter did not treat this limited breeding right as tangible personal property. Its sale therefore was not taxable on that basis.

The source also states, without surrounding facts or explanation, that use tax not paid to DMV was properly assessed in an audit. Because the letter does not identify the transaction or connect that sentence to the breeding right, this page does not use it to alter the stated breeding-share holding.

Citations and references

• The source letter cites no statute or regulation by number.

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 540.0060
• Original supporting opinion: 540.0060 PDF

Original ruling text

540.0060

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

November 2, 1962
“Tangible Personal Property”
Under Sales and Use
Tax Act

W--- & S--Attorneys at Law
XXXX --- Boulevard
--- --- XX, California
Attention:

Mr. M--- E. S---

Gentlemen:
We regret the delay in replying to your letter of September 26. Although sales of fractional interests in tangible personal property are regarded as subject to sales tax, we do not believe that “breeding shares,” as you describe them, constitute tangible personal property for sales tax purposes. Since the use tax was not paid to DMV, the tax was properly assessed in the audit. We reach this conclusion in view of your statement that “a share owner’s sole rights under the agreement generally are to have a thoroughbred mare bred to such stallion once each year during the breeding season without charge.” Very truly yours,

E. H. Stetson
Tax Counsel

EHS:fb
cc:

--- --- (--) – Subdistrict Administrator