Ezel / Tax Rulings / CA

Could a permitted boat-and-trailer seller buy registrable trailers tax-free for resale without holding a DMV dealer license?

Short answer Yes. A valid seller's permit allowed ex-tax trailer purchases for resale even though the trailers required registration and the reseller was not DMV-licensed.
State
CA
Ruling
Annotation 585.0240
Tax type
Sales and Use Tax
Issued
1965-11-03
Issued by
California State Board of Equalization
Requested by
Internal memorandum to the Fresno District Administrator
Topics
boat trailers purchases for resale seller permits registered vehicles
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1965. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1965
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 historical California State Board of Equalization internal Tax Counsel memorandum dated November 3, 1965, published by CDTFA as support for a sales and use tax annotation. It distinguishes boat-trailer resellers with seller's permits from an earlier automobile-focused digest statement involving persons without automobile dealer licenses. Another taxpayer should not treat this short staff memorandum as binding, and current resale-certificate, vehicle, trailer, seller-permit, and DMV licensing rules should be checked. 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

An earlier legal digest said that a person without an automobile dealer license could not buy a vehicle tax-free for profitable resale in the course of business. District staff asked whether that rule also prevented boat-and-trailer sellers from purchasing boat trailers for resale.

Tax counsel limited the earlier statement to automobile purchases and sales. A seller of boats and trailers with a valid seller's permit could purchase trailers tax-free for resale even though the trailers were registrable vehicles and the seller lacked a DMV dealer license.

What this means for you

Boat and trailer retailers

The historical resale right followed the seller's permit and genuine resale purpose, not DMV automobile-dealer licensing.

Accountants and tax professionals

Confirm the permit, resale documentation, property classification, and actual resale activity. Do not transfer an automobile-specific licensing rule to trailers without checking current law.

Common questions

Q: Did the trailers require registration?

A: Yes, but that did not prevent the resale purchase.

Q: Did the seller hold a DMV dealer license?

A: No.

Q: What authorization did the seller have?

A: A valid seller's permit.

Q: Could the trailers be purchased tax-free?

A: Yes, when genuinely purchased for resale.

Citations and references

  • The memorandum interprets a September 16–22, 1965 Current Legal Digest annotation and does not cite a specific statute.

Source

Original ruling text

State of California

Memorandum

Board of Equalization

585.0240
Sacramento

To:

Fresno – District Administrator

November 3, 1965

From:

Tax Counsel (GAT) - Headquarters

Subject:

Annotation in the Current Legal Digest for the period September 16, 1965 to September 22, 1965; topic entitled “Automobiles - - Use Tax.”

This is in reply to your letter of September 30 regarding the application of tax with respect to sales of boat trailers to permittees for resale. The annotation in the Current Legal Digest of September 16-22, 1965, which states that a person not holding a dealer’s license may not acquire a vehicle ex tax claiming it is for resale at a profit in the course of business, specifically is meant to apply to a person not holding an automobile dealer’s license who purchases and sells an automobile In our opinion, however, a seller of boats and trailers who has a valid seller’s permit, may purchase the trailers ex tax for resale, even though the trailers are vehicles of a type subject to registration and the seller is not a dealer licensed by the Department of Motor Vehicles.

GAT:dse

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