Was equipment transferred with a group of Florida service stations taxable when the contract allocated a total equipment price but did not price each item?

Subject

Sale of Tangible Personal Property as Part and Parcel of the Sale of Real Property

Plain-English summary

The equipment transferred with the service stations was not subject to sales tax as a separate tangible-property sale. The contract listed cash registers, dispensers, tanks, repair equipment, and other property and allocated an overall amount to equipment, but it did not assign a separate price to each item.

The Department treated those items as part and parcel of the real-property transaction. It said the result would differ for inventory and for aircraft, boats, mobile homes, motor vehicles, or other property required to be registered, licensed, titled, or documented.

What this means for you

Under the ruling's 1994 approach, merely listing business equipment and allocating a total amount to it did not defeat the real-property treatment. Separately pricing individual items would be materially different. The ruling did not decide documentary stamp or intangible-tax consequences.

Common questions

Did listing every equipment item make the transfer taxable? No, because the contract did not separately price each listed item.

Did allocating a total price to equipment make it taxable? No, not on the reviewed contract.

Did the same treatment cover inventory or titled vehicles? No. The ruling expressly excluded those categories, while noting that inventory might qualify separately for resale treatment.

Citations and references

• Fla. Admin. Code r. 12A-1.038
• Fla. Stat. § 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 94A-045

Original ruling text

Aug 02, 1994

Re: TAA 94A-045
Sale of Tangible Personal Property as Part and Parcel of
the Sale of Real Property

Dear

This is in response to your letter to the Department, dated
July 21, 1994. Your letter incorporates by reference a
previously issued Letter of Technical Assistance (hereinafter,
LTA) issued to XXX, dated January 14, 1994, which you forwarded
to my attention, and an LTA previously issued to you, on or
about June 24, 1994, which regard the same transaction.

As part of your prior correspondence with the Department
you had also submitted a copy of the agreement of purchase and
sale between XXX (hereinafter Seller) and XXX (hereinafter,
Buyer), which you have requested be incorporated by reference
for review and determination of this Technical Assistance
Advisement request.

FACTS

Seller is in the business of marketing and storing
petroleum products. During 1993, Seller made a business
decision to divest itself, in two different market areas, of a
number of service stations. Since Seller was unsuccessful in
finding a single purchaser for all stations, it made a series of
sales of some service stations, with each sale including
tangible personal property used in maintaining the business
(e.g., cash registers, dispensers, tanks, car repair equipment,
etc.), but not of the type usually sold in the day-to-day
operations of the service stations. Most service stations being
sold include the sale of the tangible personal property used in
the business as well as the sale of the real property on which
the service stations are located.

Buyer contracted to purchase a group of the locations

inclusive of the real property and certain tangible personal
property used in maintaining the business (e.g. cash registers,
dispensers, tanks, car repair equipment, etc.), but not the type
of tangible personal property sold in the day-to-day operations
of the businesses.

The agreement of purchase and sale between Seller and Buyer
was amended by Exhibits which list: 1) the tangible personal
property being sold, 2) the total sales/purchase price for each
location, 3) the price allocation of land/building, and 4) the
price allocation of equipment or tangible personal property.

TAXPAYER'S (BUYER) POSITION

It is the position of Buyer that it has been erroneously
charged Florida sales tax on the tangible personal property
incorporated in the agreement of purchase and sale between
Seller and Buyer. Buyer asserts this position based upon the
Department's prior written rulings and statements on this issue.

ISSUE

Whether the sale of tangible personal property as "part and
parcel" of the sale of real property is exempt from Florida
sales tax?

Whether the price allocation between real property and
tangible personal property, and the listing of the tangible
personal property preclude the part and parcel exemption from
applying to the case sub judice?

DEPARTMENT'S RESPONSE

The legislative intent is clear that the sale of real
property is not subject to sales tax. To that extent, the longstanding position of the Department has been that if the sale of
real property encompasses the transfer of certain items of
tangible personal property, the presence of such items of
tangible personal property will not change the non-taxable
nature of the transaction, provided: 1) that such items are not
separately stated, and 2) that such items are not separately

priced or itemized in the sales contract, bill of sale, or other
tangible evidence documenting the sale.

Therefore, when Seller disposes of the service stations'
tangible personal property as "part and parcel" of the sale of
real property, such sale of the tangible personal property is
not subject to sales tax. The Department reaches this
conclusion by noting that, although all the items of tangible
personal property were listed in an attachment to the agreement
of purchase and sale between Seller and Buyer, such items were
not separately itemized. Since the taxable event occurs when the
tangible personal property is: 1) separately stated, and 2)
separately itemized, then the occurrence of separately stating
the tangible personal property without separately itemizing the
price of each item, will not result in a taxable transaction.

Hence, in direct response as to whether the listing of the
items of tangible personal property, and the price allocation
between real property and tangible personal property, would
preclude the exemption of sales tax to the sales of the
stations, which include the sale of tangible personal property
as "part and parcel" of the sale of real property, and upon
review of the agreement of purchase and sale between Seller and
Buyer and the corresponding Exhibits, the Department's response
is in the negative. The Department concludes that the listing
of the items of tangible personal property without separately
itemizing each item, and the price allocation between real
property and tangible personal property does not preclude the
part and parcel exemption from sales tax, when the sale of real
property includes certain items of tangible personal property as
part and parcel of the sale of the real property.

However, please be advised that, the sale of aircraft,
boats, mobile homes, motor vehicles, or other vehicles in this
state of a class or type required to be registered, licensed,
titled, or documented in this state or by the United States
Government, are not inclusive to being part and parcel of the
sale of real property, and, therefore, will be subject to sales
tax. Likewise, the part and parcel exemption does not apply to
the sale of inventory items. (Although such inventory items may
be exempt pursuant to the resale exemption found in Rule 12A-

1.038, F.A.C.)

Furthermore, while sales tax does not apply to the sale of
real property, such sales may be subject to documentary stamp
and/or intangible personal property tax. Since you have not
requested a ruling regarding applicability of either of these
taxes, none will be provided herein.

This response constitutes a Technical Assistance Advisement
under s. 213.22, F.S., which is binding on the Department only
under the facts and circumstances described in the request for
this advice as specified in s. 213.22, F.S. Our response is
based on those facts and the specific situation summarized
above. You are advised that subsequent statutory or
administrative rule changes or judicial interpretations of the
statutes or rules upon which this advice is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response and your request
are public records under Chapter 119, F.S., which are subject to
disclosure to the public under the conditions of s. 213.22, F.S.
Your name, address, and any other details which might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Nydia Men‚ndez
Tax Law Specialist

Control No. 16657