Was a foundation's purchase of a sailplane sculpture exempt because it was displayed free to the public at an airport?

Plain-English summary

An artist sold a sailplane sculpture to a foundation. The work was displayed at an airport throughout the year at no charge to the public or the city, but the foundation retained title.

California's art exemption required a qualifying government or museum purchase, or a purchase for donation with direct retailer delivery and written title-transfer evidence.

The foundation did not buy the sculpture for donation, did not operate a public museum under government contract, and did not buy it for display in a museum. Public airport display alone did not qualify, so tax applied.

What this means for you

Artists, foundations, airports, museums, and tax advisers

Structure the transaction around a statutory purchaser or direct-donation path before delivery. Public access to privately owned art does not by itself create a museum exemption.

Common questions

Q: Was the sculpture open to public viewing?

A: Yes.

Q: Did that fact alone create exemption?

A: No.

Q: Did the foundation donate title to a qualifying entity?

A: No.

Citations and references

• California Revenue and Taxation Code §§ 6051, 6201, 6365(a), and 6401
• California Sales and Use Tax Regulation 1586(c)(1)
• California Revenue and Taxation Code § 23701d, as cited in the source

Source

• Annotated Legal Opinions collection: CDTFA Annotated Legal Opinions
• Annotation page: Annotation 610.4750
• Original supporting opinion: 610.4750 PDF

Original ruling text

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610.4750

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

JOHAN KLEHS
First District, Hayward

LEGAL DIVISION (MIC:82)
450 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0082)
Telephone: (916) 324-2614
FAX: (916) 323-3387

DEAN ANDAL
Second District, Stockton

October 16, 1996

ERNEST J. DRONENBURG, JR.
Third District, San Diego
BRAD SHERMAN
Fourth District, Los Angeles
KATHLEEN CONNELL
Controller, Sacramento

Mr. D--- W. B--The D--- B--- F--XXXX --- --- Road
--- ---, CA XXXXX
Re:

────────
E. L. Sorensen, Jr.
Executive Director

A--- X

Dear Mr. B---:
Your letter dated August 14, 1996, to Mr. Chuck Harris, Return Analysis Section, has been referred to me for response. You ask whether sales tax applies to the sale of “A--- X,” a sailplane sculpture, by artist D--- S--- to the D--- B--- F---. You state that: “The plane is located at the airport for as long as it is desired, certainly for the foreseeable future, at no charge to the public or city on public display as provided. It is on display daily all throughout the year.” DISCUSSION Retail sales of tangible personal property in California are subject to sales tax, measured by the gross receipts, unless the sale is specifically exempt from taxation by statute. (Rev. & Tax. Code § 6051.) When sales tax does not apply, use tax, measured by the sales price, applies to the use of tangible personal property purchased from a retailer for storage, use, or other consumption in California, unless the use is exempt from taxation by statute. (Rev. & Tax. Code §§ 6201, 6401.) Sales and Use Tax Regulation 1586(c)(1) (copy enclosed), which interprets Revenue and Taxation Code section 6365(a), provides that tax applies to the sale or use of original works of art unless, among other requirements, the original works of art are purchased by: 1. in this state;

this state, or any city, county, city and county, or other local governmental entity

2.
any nonprofit organization which operates a public museum under contract for such governmental entity; 3. any nonprofit organization qualifying for exemption from state income tax pursuant to Section 23701d of the Revenue and Taxation Code. The work of art must be purchased for display in a museum either operated by the purchaser or by another nonprofit organization which qualified for exemption pursuant to Section 23701d. The museum in which

Mr. D--- W. B---

-2-

October 16, 1996
610.4750

the art is displayed must be open to the public regularly for not less than 20 hours per week and for not less than 35 weeks of the calendar year; or 4. any person for donation to the above governmental entities or nonprofit organizations. To qualify for exemption from the tax under this subparagraph, donated works of art must be delivered by the retailer of the art directly to the donee pursuant to the instructions of the buyer-donor. Written evidence of transfer of title to the works of art from the buyer-donor to the donee must be maintained by the retailer and the buyer-donor to support the exemption. Our understanding is that the D--- B--- F--- has title to A--- X, which is currently being displayed at the --- --- Airport, and that the foundation did not purchase A--- X for donation to any of the governmental entities or nonprofit organizations listed above. We also assume that the D--- B--- F--- does not operate a public museum under contract of a state or local governmental entity and that A--- X was not purchased for display in a museum. Under these facts, tax applies to the sale of A--- X to the D--- B--- F---. If you have any further questions, please write again. Sincerely,

Sophia H. Chung
Tax Counsel
SHC:rz
Enclosure: Sales and Use Tax Regulation 1586
cc:

Mr. Chuck Harris (Mic: 35)
R--- D--- S--D--- S--XXXX N. --- --- Avenue
---, California XXXXX
--- District Administrator (--)