Ezel / Tax Rulings / CA

Did a dealer owe use tax when a caravan drove California-licensed resale vehicles from a Michigan factory?

Short answer No. Factory-to-dealership transport, followed only by demonstration and display while held for resale, did not create taxable use.
State
CA
Ruling
Annotation 580.0040
Tax type
Sales and Use Tax
Issued
1954-07-16
Issued by
California State Board of Equalization
Requested by
A representative asking about a dealer's factory pickup and caravan transport of vehicles bought for resale
Topics
automobile dealers factory delivery resale inventory california registration demonstration use tax
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1954. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1954
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a July 16, 1954 California State Board of Equalization counsel letter about new vehicles bought for resale, delivered at a Detroit factory, California-licensed before transport, and driven directly to the dealer by an independent caravan company. Its result assumed no use beyond transportation and demonstration or display while held for sale. Current registration, inventory, demonstration, delivery, resale, and use-tax rules may differ. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

The automobile dealer bought new cars and trucks for resale and took delivery at the Detroit factory. An independent caravan company then drove them directly to the dealer's California business, even though they had already been licensed to the dealer under California law.

That licensing and transport did not create use-tax liability. The conclusion assumed the vehicles were held for resale after arrival and were used only for the trip to California plus ordinary demonstration and display.

Citations and references

  • California Vehicle Code licensing requirements (referenced without a section number in the source)

Source

Original ruling text

580.0040

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION
July 16, 1954
Your letter of July 2
Attention: Mr. ______

Gentlemen:
Your client, an automobile dealer, has agreed to purchase for resale a number of new automobiles and trucks with delivery to him at the factory in Detroit, Michigan. The automobiles and trucks will be driven direct to California to the automobile dealer's regular place of business by an independent caravan driving company. The automobiles and trucks to be driven to California will be licensed to the automobile dealer under the California Vehicle Code before being driven from Detroit, Michigan. Upon reaching their California destination at the automobile dealer's regular established place of business they will be held only for resale to customers. You inquire whether the automobile dealer will incur a use tax liability because the vehicles will originally be licensed to him for the sole purpose of driving them from Detroit to California for resale. Assuming that no additional use is made of the vehicles in addition to their transportation to this state other than their use for demonstration and display while holding them for sale in the regular course of business, no use tax liability will be incurred by the automobile dealer under the facts outlined above. Very truly yours,

W. W. Mangels
Assistant Counsel
WWM:tj
cc: San Francisco -Auditing

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