Were the attached components of an Air Force fuel-waste disposal facility fixtures or machinery and equipment under California's construction-contract rule?

Plain-English summary

The memorandum reported an appellate decision applying Regulation 1521 to two Air Force facilities.

At Edwards Air Force Base, a facility cleaned up and removed accumulated hazardous waste. Its scrubbers, blowers, tanks, pipes, fittings, filters, valves, manipulators, pumps, and control system were attached to the realty. The Court of Appeal agreed that the facility consisted of fixtures taxable to United States government contractors rather than machinery and equipment resold to the government.

The memorandum contrasted a Beale Air Force Base industrial-waste facility described only as loose equipment and a floating skimmer with accessories, with no evidence of attachment. That facility was treated as machinery and equipment.

Common questions

Were all waste-treatment components automatically fixtures?

No. The memorandum's contrast turned on the evidence of attachment and the character of each facility.

What was the result for the Edwards facility?

Its attached components were fixtures taxable to the federal construction contractors.

Was the reported appellate decision published?

No. The memorandum calls it unpublished.

Citations and references

• Cal. Code Regs., tit. 18, reg. 1521 — fixture-versus-machinery distinction for construction contractors
• Maecon, Inc. v. State Board of Equalization — unpublished appellate decision reported by the memorandum

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/565-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/565-0682.pdf

Original ruling text

State of California

Board of Equalization

565.0682

Memorandum
To:

From:

Subject:

Honorable Brad Sherman
Honorable William Bennett
Honorable Ernest J. Dronenburg, Jr.
Member, 4th District
Honorable Gray Davis

Date:

March 22, 1991

E. L. Sorensen, Jr.
Chief Counsel
Recent Court Action
Maecon, Inc. v. State Board of Equalization
On March 19, 1991, the California Court of Appeal issued its decision in the abovereferenced case, which is another of the actions brought on behalf of Tax Consultant REDACTED TEXT testing the Board's distinction between "fixtures" and "machinery and equipment" within Regulation 1521 on construction contractors. The trial court ruled in favor of Maecon on several issues, and in favor of the Board on others. In yet another unpublished opinion, the Court of Appeal affirmed the part of the trial court decision in the Board's favor and reversed a large part of the decision by the trial court in plaintiff's favor. The Court of Appeal agreed with the Board that the fuel waste facility at Edwards Air Force Base was comprised of fixtures taxable to United States Government contractors and was not comprised of machinery and equipment resold by the contractor to the United States Government. The purpose of the fuel waste disposal facility was to clean up and remove hazardous waste materials that accumulated at the Air Force base. The facility included scrubbers, blowers, tanks, pipes, fittings, filters, valves, manipulators, pumps, and a control system, all of which were attached to the realty. The Court of Appeal agreed with the trial court that an industrial waste facility at Beale Air Force Base was "machinery and equipment" resold to the United States Government, and not "fixtures", because the facility was described in the record as "loose equipment" and "a floating skimmer with accessories", with no evidence of attachment to realty. ELS:wk 2901C Attachment cc: Ms. Cindy Rambo Ms. Judy Agan Mr. Bob Nunes Mr. Glenn Bystrom