Was a separately stated admission charge taxable when a theatre restaurant also required patrons to buy a minimum number of drinks or a dinner?

Plain-English summary

Tax counsel considered two entertainment arrangements. In the first, a customer paid a separately billed cover charge and had to buy at least two drinks. In the second, a theatre restaurant charged admission at the door and required the patron to purchase dinner.

In both cases, the food or drink minimum appeared as a separate item. The admission charge therefore was not itself a minimum charge for food or drinks.

The memorandum concluded that a separately stated charge for admission to a place furnishing entertainment could be excluded from taxable gross receipts even though the admitted patron also had to make a minimum food or drink purchase.

Common questions

Did requiring two drinks make the cover charge taxable?

No, because the drink minimum was separately stated from the admission charge.

Did requiring dinner change the theatre admission result?

No. The source reached the same conclusion where admission was charged at the door and dinner was separately required.

Citations and references

• The complete supporting memorandum cites no numbered statute, regulation, or case.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/550-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/550-0680.pdf

Original ruling text

State of California

Board of Equalization

Memorandum

To:

San Francisco – Aud. (LC/REP)

From:

Tax Counsel (PM)

550.0680

Date:

January 28, 1965

This is in reply to your memo of October 14 regarding the taxability of admission charges. In the first situation, the customer is required to buy a minimum of two drinks per person, the admission charge being billed separately as in the following example: 4 admissions (cover charge) at $4.00

$16.00

8 drinks (min. 2 per person) at $1.50 ea.

12.00
$28.00

In the second situation, a theatre restaurant makes a separate admission charge at the door, but the patron is required to purchase a dinner upon admission. It appears from these facts that in each instance the admission charge is not in the nature of a minimum charge for the food or drinks, since this is specifically covered by a separate item. Accordingly, it is our opinion that the admission charges may be excluded from taxable gross receipts. In other words, we do not believe the tax is applicable to separately stated charges for admission to a place furnishing entertainment, even though the patron upon admittance must pay a minimum amount for food or drinks.

PM:md

[1b]