Ezel / Tax Rulings / CA

Did taxability of a vessel component depend on the vessel's activity at the exact time of sale or on its principal use?

Short answer Principal use controlled. A mixed-use vessel could qualify when its principal use was transportation for hire in interstate or foreign commerce, even if it also made intrastate voyages. Principal intrastate use made the component sale taxable.
State
CA
Ruling
Annotation 600.0280
Tax type
Sales and Use Tax
Issued
1951-02-16
Issued by
California State Board of Equalization
Requested by
A redacted seller serving a mixed-use vessel customer
Topics
principal use component parts interstate commerce
Source
View Original PDF

Apply this to your situation

This page answers the general question as of 1951. Ask about yours and see what current California tax law says, with citations.

Currency note: this ruling is from 1951
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 February 16, 1951 California State Board of Equalization tax-counsel letter published by CDTFA as support for a sales and use tax annotation. It addresses a customer whose vessels performed both qualifying and nonqualifying operations and applies then-current section 6368 and Ruling 51.5. The conclusion turns on principal use, not a single voyage. 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

A seller's customer owned vessels that sometimes operated in a way meeting the watercraft exemption and sometimes did not.

California said a component sale depended on the vessel's principal use, not the particular voyage or activity underway when the sale occurred.

Under Ruling 51.5, mixed interstate and intrastate voyages could qualify when the principal use was transportation for hire in interstate or foreign commerce. If principal use was intrastate commerce, tax applied.

What this means for you

Marine-parts sellers, vessel operators, and tax advisers

Do not classify a component sale from a snapshot of the vessel's current trip. Maintain operating records supporting the vessel's overall principal-use calculation.

Common questions

Q: Did the exact voyage at the sale date control?

A: No.

Q: Could a vessel making some intrastate voyages still qualify?

A: Yes, if its principal use was qualifying interstate or foreign transportation for hire.

Q: What if principal use was intrastate?

A: Tax applied.

Citations and references

  • California Revenue and Taxation Code § 6368
  • California Sales and Use Tax Ruling 51.5, as cited in the source

Source

Original ruling text

600.0280

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

February 16, 1951

E--- & G--XXX --- ----- ---, California
Attention:

Mr. M. H. L--Re:

SZ -- XX XXXXXX

Gentlemen:
This is in answer to your letter of February 6 concerning the application of section 6368 of the Sales and Use Tax Law and Ruling 51.5 where a customer owns vessels which operate a portion of the time in such a manner as to meet the requirements for the exemption and a portion of the time in some other manner. The taxability of sales of property becoming a component part of watercraft depends upon the principal use to which the watercraft is put and not the particular use in which it is engaged at the time of the sale. As stated in Ruling 51.5, “The tax does not apply with respect to watercraft or component parts thereof that make voyages both in interstate or foreign commerce and voyages that are exclusively in intrastate commerce provides the principal use of the watercraft is transportation for hire in interstate or foreign commerce. The tax applies with respect to watercraft making voyages both in interstate or foreign commerce and voyages that are exclusively in intrastate commerce where the principal use of the watercraft is in intrastate commerce.” Very truly yours,

E. H. Stetson
Tax Counsel

EHS:ph
cc:

Burnett Sheehan

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