Ezel / Tax Rulings / CA

Did California's watercraft exemption apply to freight containers designed for both land movement and carriage aboard vessels?

Short answer No. California concluded that section 6368 did not exempt the described freight-container sales. The annotation explains that the containers were designed for land movement as well as storage aboard vessels for movement at sea.
State
CA
Ruling
Annotation 600.0040
Tax type
Sales and Use Tax
Issued
1958-11-26
Issued by
California State Board of Equalization
Requested by
A representative of a redacted freight-container buyer
Topics
watercraft exemption
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1958. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1958
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 November 26, 1958 California State Board of Equalization tax-counsel letter published by CDTFA as support for a sales and use tax annotation. The linked letter is brief and refers to facts supplied in earlier memoranda and conferences; the current annotation states that the containers were designed for land movement as well as vessel storage. 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 taxpayer's representative sought watercraft-exemption treatment for freight containers. California reconsidered the question after conferences, reviewed the representative's memorandum, and consulted informally with the Attorney General's office.

The Board and the Attorney General's office both concluded that section 6368 did not apply. CDTFA's annotation identifies the key fact: the containers were designed for land movement as well as storage aboard vessels for movement at sea.

What this means for you

Freight carriers, container suppliers, and tax advisers

Equipment used in marine shipping is not automatically a watercraft component. Document whether the item is dedicated to and integrated with the vessel or instead serves an intermodal land-and-sea transportation role.

Common questions

Q: Were the described freight-container sales exempt?

A: No.

Q: Did use aboard a vessel establish component status?

A: No. The annotation emphasized that the containers were also designed for land movement.

Q: Did the Attorney General's office agree?

A: Yes, according to the Board's letter.

Citations and references

  • California Revenue and Taxation Code § 6368

Source

Original ruling text

  1. 0040..,

November 26, 1958

--,r

Attn:

t

Gentlemen:
Following our most recent conference on this matter, we have given further consideration to the question of the applica­ bility of the sales tax with respect to sales of freight con­ tainers to your client and have conferred informally with the Office of the Attorney General.

)

We have reviewed the memo which you submitted at the confer­ ence and have submitted a copy of that memo to the Attorney General's office. That office has stated to us that it believes the watercraft exemption, Section 6368 of the Sales and Use Tax Law, is not applicable to sales of the freight containers to be used in the manner set forth in your various memoranda and in your conferences with the undersigned. We have already indicated that this is our view. Very truly yours

E. H. Stetson
Tax Counsel
EHS:tl
cc : San Francisco - Admin.

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