As a New Mexico artist, do I owe gross receipts tax on art a gallery sells for me, and can I deduct rent from letting a film crew use my studio?

Plain-English summary

A Santa Fe artist won his protest on all three issues and had his entire gross receipts tax assessment abated: proven out-of-state sales were not taxable, his New Mexico consignment art sales were deductible even without a certificate, and short-term rentals of his studio to film crews counted as a deductible lease of real property. Protest GRANTED, assessment abated in full.

Brian Blount was an artist living in Santa Fe. In 1994 he sold his work through consignment arrangements with several galleries — Mill Street Gallery in Aspen, Colorado; Umbrello, Inc. in Santa Fe; and The Elaine Horwitch Gallery, which had locations in New Mexico, Arizona, and California. Under each arrangement he kept title to a piece until it sold and then split the proceeds 50/50 with the gallery. In 1998, acting on IRS information about his 1994 federal business income, the Department found he was not registered and had not paid gross receipts tax, and assessed him $2,289.30 in tax, penalty, and interest. He protested. As always, the assessment was presumed correct, so the burden was on Blount to prove otherwise (Archuleta v. O'Cheskey; Wing Pawn Shop).

Out-of-state sales — proven for some, not others

Everyone agreed out-of-state sales are not subject to New Mexico gross receipts tax; the question was proof. Blount cleared that bar for two sales: a show at the Colorado gallery (backed by a printed invitation and a matching bank deposit slip) and a direct sale to a buyer he met in San Francisco, arranged from photographs and shipped from the Arizona gallery. The hearing officer found him a credible witness whose low-volume, high-value sales he could reasonably be expected to remember. Those receipts were abated. But sales through The Elaine Horwitch Gallery were a problem: the gallery kept its buyers confidential (standard in the art world, to stop artists from dealing directly with clients), so Blount could not identify which pieces sold from the New Mexico gallery versus Arizona or California. Because he could not carry his burden of separating them, all Horwitch sales were, at this step, treated as New Mexico sales.

Consignment sales need no NTTC — the Department amended its own rule

The Department had disallowed a deduction for the New Mexico consignment sales (Horwitch and Umbrello) because Blount held no Type 2 nontaxable transaction certificate (NTTC). The hearing officer rejected that. The deduction the regulation pointed to — Section 7-9-47, for sales for resale — did not even fit, because a consignment where the artist keeps title until the final sale is more like a joint venture than a resale. Crucially, the Department itself had just amended the regulation: at a July 2000 rulemaking it conceded there was no statutory authority to require a consignor to hold an NTTC, and the amended rule (renumbered 3.2.205.12 NMAC, effective October 31, 2000) allows the consignment deduction on an NTTC or "other proof acceptable to the department." Since the underlying law had not changed, that construction applied to Blount's 1994 sales too: "The Department is entitled to change its construction of the law; it cannot change the law itself." The Department did not dispute that the Horwitch and Umbrello sales were genuine consignment sales, so Blount could deduct them — which rescued the New Mexico Horwitch receipts that had otherwise been treated as taxable.

Renting a studio to film crews was a lease, not a license

Blount rented his 5,000-square-foot Santa Fe studio to film companies for movie and commercial sets, sometimes by the day or hour. The Department argued these short rentals were a taxable license to use property rather than a deductible lease. The hearing officer sided with Blount. New Mexico defines a lease as giving up possession and use for consideration and a definite term (Section 7-9-3(J); Cutter Flying Service), and Blount surrendered complete possession — he was barred from entering while a crew occupied the building, crews could tear down and rebuild walls, and each had to carry liability insurance. The Department's claimed 30-day minimum came from a rule (3 NMAC 2.53.8.2) that applies only to trailer parks under Section 7-9-53(B), not to the general real-property-lease deduction in Section 7-9-53(A). Short duration alone did not defeat a lease (Quantum Corp.), so the rental receipts were deductible.

Result: protest GRANTED — Assessment No. 2261120 abated in full.

What this means for you

Out-of-state sales are exempt, but you must be able to prove where the sale happened

Sales that occur outside New Mexico are not subject to gross receipts tax — but the taxpayer carries the burden. Documentation as modest as a show invitation, a dated deposit slip, and credible testimony can be enough. Where a middleman won't tell you where a sale occurred, you may be stuck treating it as a New Mexico sale unless another deduction applies.

Consignment sellers do not need an NTTC to deduct their receipts

Because the Department conceded it lacked authority to require a certificate, a consignor can support the consignment deduction with an NTTC or other acceptable proof that the goods were genuinely sold on consignment. Keep your consignment agreements and sale records. Note that consignment is treated as its own category, not as a sale for resale, because the consignor keeps title until the final sale.

Short-term rentals can still be a deductible lease of real property

Whether a rental is a deductible lease or a taxable license turns on control, not calendar length. If you give up complete possession and control of the space for a definite term, a rental measured in days — even hours — can qualify as a lease. The 30-day rule the Department invoked applies only to trailer parks.

A change in how the Department reads a statute can reach back over open periods

When the Department revises a regulation to reflect that a statute never authorized a requirement, that new reading applies to earlier transactions during the whole period the statute stayed the same — it is a corrected interpretation, not a change in the law.

Common questions

Q: Do New Mexico artists owe gross receipts tax on gallery sales?
A: Receipts from New Mexico sales are generally taxable, but a consignor can deduct receipts from genuine consignment sales, and sales that actually occur out of state are not subject to the tax. You need records to establish which is which.

Q: I sell on consignment. Do I need a nontaxable transaction certificate?
A: No. The Department acknowledged it had no statutory authority to require a consignor to hold an NTTC and amended its rule to accept other proof that the property was sold on consignment.

Q: A gallery won't tell me which location sold my work. Can I still claim the sale as out-of-state?
A: Only if you can prove it. In this ruling the artist could not separate the multi-state gallery's New Mexico sales from its out-of-state sales, so those were treated as New Mexico sales — though the consignment deduction ultimately covered them.

Q: I rent my property for just a day or two at a time. Is that a taxable license?
A: Not necessarily. If you surrender complete possession and control for a definite term, it can be a deductible lease of real property regardless of how short it is. The 30-day requirement the Department cited applies only to trailer-park spaces.

Citations and references

Statutes and regulations:

• NMSA 1978, § 7-1-17(C) — an assessment of tax is presumed correct, and the taxpayer bears the burden of overcoming it
• NMSA 1978, § 7-9-47 — deduction for receipts from selling tangible personal property for resale (the resale deduction the old consignment rule relied on)
• NMSA 1978, § 7-9-53(A) — deduction for receipts from leasing real property
• NMSA 1978, § 7-9-53(B) — receipts of hotels, trailer parks, and similar facilities from lodgers are not lease receipts (with a one-month carve-out for trailer-park spaces)
• NMSA 1978, § 7-9-3(J) — defines leasing; a license to use property is a sale of a license, not a lease
• Regulation 3 NMAC 2.47.12, renumbered 3.2.205.12 NMAC (eff. Oct. 31, 2000) — consignment-sales deduction; amended to accept an NTTC "or other proof acceptable to the department"
• Regulation 3 NMAC 2.53.8.2 — the one-month rental rule, applicable only to trailer parks

Cases cited:

• Archuleta v. O'Cheskey, 84 N.M. 428, 504 P.2d 638 (Ct. App. 1972) — the taxpayer bears the burden of overcoming the presumption of correctness
• Wing Pawn Shop v. Taxation and Revenue Department, 111 N.M. 735, 809 P.2d 649 (Ct. App. 1991) — deductions and exemptions are construed strictly in favor of the taxing authority and must be clearly established
• Cutter Flying Service, Inc. v. Property Tax Dep't, 91 N.M. 215, 572 P.2d 943 (Ct. App. 1977) — defines a lease as surrender of possession and use for consideration and a definite term
• Quantum Corp. v. State Taxation & Revenue Dep't, 1998-NMCA-050, 125 N.M. 49, 956 P.2d 848 — short duration alone does not prevent a rental from being a lease

Source

• Listing: New Mexico Decisions & Orders
• Decision post: Brian Blount
• Decision PDF: D&O 00-29

Original ruling text

BEFORE THE HEARING OFFICER
OF THE TAXATION AND REVENUE DEPARTMENT
OF THE STATE OF NEW MEXICO

IN THE MATTER OF THE PROTEST OF
BRIAN BLOUNT No. 00-29
ID NO. 02-134195-00-8
ASSESSMENT NO. 2261120

DECISION AND ORDER

A formal hearing on the above-referenced protest was held September 20, 2000, before

Margaret B. Alcock, Hearing Officer. Brian Blount (“Taxpayer”) was represented by Bryan P.

Biedscheid with the law firm Catron, Catron & Sawtell, P.A. The Taxation and Revenue Department

("Department") was represented by Bridget Jacober, Special Assistant Attorney General. On October

13, 2000, the hearing officer solicited additional comments from the parties concerning a pending

regulatory change that could affect the outcome of the protest. The Department’s comments were

received October 16, 2000; the Taxpayer did not respond Based on the evidence and arguments

presented, IT IS DECIDED AND ORDERED AS FOLLOWS:

FINDINGS OF FACT

1. The Taxpayer is an artist residing in Santa Fe, New Mexico.

2. During 1994, the Taxpayer sold his art work through consignment agreements with

Mill Street Gallery in Aspen, Colorado; Umbrello, Inc. in Santa Fe, New Mexico, and The Elaine

Horwitch Gallery, which had locations in Santa Fe, New Mexico; Scottsdale, Arizona; Sedona,

Arizona; and Palm Springs, California.

3. Pursuant to the consignment agreements, the Taxpayer retained title to the art work

until it was sold. The proceeds of each sale was split 50/50 with the gallery.

4. The Taxpayer did not obtain nontaxable transactions certificates from any of the

galleries with which he had consignment agreements.

5. Sales of the Taxpayer’s art work by Mill Street Gallery were made from the gallery’s

location in Colorado.

6. Sales of the Taxpayer’s art work by Umbrello, Inc. were made from the gallery’s

location in New Mexico.

7. Sales of the Taxpayer’s art work by The Elaine Horwitch Gallery (“Horwitch”) were

made from one or more of the gallery’s locations in New Mexico, Arizona and California. The

Taxpayer delivered his art work to Horwitch’s Santa Fe gallery and it was then distributed among the

other galleries. The decision as to where a piece of art work would be shown was made by

Horwitch.

8. When a piece of art work was sold by Horwitch, the Taxpayer received a check for

his share of the sale proceeds from Horwitch’s business office in Scottsdale. He was not told the

name of the person who purchased the item, nor was he told the location of the gallery from which it

was sold.

9. It is common for a gallery to withhold the identity of its buyers from the artists the

gallery represents. Client lists are kept confidential in order to prevent the artist from terminating his

relationship with the gallery and dealing directly with those clients known to be interested in the

artist’s work.

10. In May 1994, the Taxpayer sold a piece of his art work to Peter Nosler, who the

Taxpayer met during a visit to San Francisco.

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11. The Taxpayer carried photographs of his art work, which he showed to Mr. Nosler.

Based on the photographs, Mr. Nosler decided to purchase a piece that was then being shown at the

Horwitch gallery in Scottsdale, Arizona.

12. The Taxpayer called Horwitch and arranged to have the piece shipped directly from

Scottsdale to Mr. Nosler in San Francisco.

13. In 1994, the Taxpayer owned a 5,000 square-foot warehouse in Santa Fe, New

Mexico, which he used as a studio.

14. The Taxpayer occasionally rented the studio to film companies to use as sets for

movies and commercials. The studio was rented on a daily and, in some cases, an hourly basis.

15. The Taxpayer gave up all control over the premises during the periods it was rented.

Because the film companies did not want details of their movies or commercials to become known

prior to screening, the Taxpayer was prohibited from entering the premises while it was occupied by

a renter.

16. The Taxpayer allowed the film companies to tear down walls and make other

alterations to the building, provided they repaired the damage by the end of the rental period. The

Taxpayer required each company to obtain commercial general liability insurance for the period it

occupied the building, including coverage for any damage to the building.

17. In 1998, the Department received information from the Internal Revenue Service

concerning the business income reported on the Taxpayer’s 1994 federal income tax return. When

the Department investigated, it found the Taxpayer was not registered with the Department and had

not reported or paid gross receipts tax on this income.

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18. On May 31, 1998, the Department issued Assessment No. 2261120 to the Taxpayer

in the total amount of $2,289.30, representing gross receipts tax, penalty and interest on his business

receipts for tax periods January through December 1994.

19. On June 28, 1998, the Taxpayer filed a written protest to the Department’s

assessment.

20. On July 27, 2000, the Department held a public hearing to consider an amendment to

Regulation 3 NMAC 2.47.12, which required consignors claiming a deduction of receipts from sales

of tangible personal property on consignment to have possession of a Type 2 NTTC.

21. During the July hearing, the Department’s representative said the Department had

concluded there was no statutory authority to require a consignor to have possession of an NTTC.

For this reason, the Department proposed to amend its regulation to allow consignors to deduct

receipts from sales of tangible personal property based on either an NTTC or other proof acceptable

to the department that the property was sold by consignment.

22. The amended regulation, renumbered as 3.2.205.12 NMAC, became effective on

October 31, 2000, the date it was published in the New Mexico Register.

DISCUSSION

There are three issues to be decided in this protest: (1) whether the Taxpayer submitted

sufficient evidence to establish that certain sales of his art work occurred outside New Mexico and

are not subject to New Mexico gross receipts tax; (2) whether the Taxpayer was required to provide

NTTCs to support his deduction of receipts from art work sold on consignment; and (3) whether the

Taxpayer’s rental of studio space qualified as a lease of real property, the receipts from which are

deductible.

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Section 7-1-17(C) NMSA 1978 states that any assessment of taxes made by the Department

is presumed to be correct, and it is the taxpayer's burden to overcome this presumption. Archuleta v.

O'Cheskey, 84 N.M. 428, 431, 504 P.2d 638, 641 (Ct. App. 1972). Where an exemption or deduction

from tax is claimed, the statute must be construed strictly in favor of the taxing authority, the right to

the exemption or deduction must be clearly and unambiguously expressed in the statute, and the right

must be clearly established by the taxpayer. Wing Pawn Shop v. Taxation and Revenue Department,

111 N.M. 735, 740, 809 P.2d 649, 654 (Ct. App. 1991). Accordingly, it is the Taxpayer’s burden to

come forward with evidence and legal arguments to show that he is entitled to the deductions and

exemptions claimed and that the Department's assessment is incorrect.

Out-of-State Sales. The Taxpayer contends the Department erroneously included receipts

from out-of-state sales when calculating the Taxpayer’s gross receipts tax liability. While there is no

dispute that out-of-state sales are not subject to gross receipts tax, it is the Department’s position that

the Taxpayer failed to provide sufficient evidence to clearly establish the nature of the sales in

dispute. The issue presented for decision is whether the Taxpayer has met his burden of proof

concerning these transactions.

Sales by Mill Street Gallery. In early 1994, the Taxpayer made sales of art work through a

consignment agreement with Mill Street Gallery in Aspen, Colorado. At the hearing, the Taxpayer

introduced a printed invitation that Mill Street Gallery mailed to its clients advertising a show of

recent works by the Taxpayer. The invitation indicates the show was held at the Colorado gallery

from February 21-March 6, 1994. The Taxpayer also provided a copy of a March 8, 1994 bank

deposit slip with his handwritten notation: “Mill St.” for “art sales”. This evidence, together with

the Taxpayer’s testimony, is sufficient to establish that his March 1994 receipts from Mill Street

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Gallery related to sales made outside New Mexico. The portion of the assessment attributable to

these receipts should be abated.

Sale to Peter Nosler. The Taxpayer testified that he met Peter Nosler during a visit to San

Francisco in the spring of 1994. The Taxpayer carried photographs of his art work, which he showed

to Mr. Nosler. Based on the photographs, Mr. Nosler decided to purchase a piece that was then

being shown at The Elaine Horwitch Gallery in Scottsdale, Arizona. The Taxpayer called the gallery

and arranged to have the piece shipped directly from Scottsdale to Mr. Nosler in San Francisco. In

May 1994, the Taxpayer received payment from Mr. Nosler, which is reflected on the Taxpayer’s

May 6, 1994 bank deposit slip. Although the only documentation of the sale is the handwritten

notation on the deposit slip, the Taxpayer’s testimony is sufficient to establish the sale to Mr. Nosler

as an out-of-state sale. The Taxpayer was a credible witness and there was nothing inconsistent or

inherently unbelievable in his testimony. Because the volume of the Taxpayer’s art sales was low,

while his sales prices were fairly substantial, it is reasonable to expect that the Taxpayer would

remember the details of most transactions. The Taxpayer has met his burden of establishing that the

Nosler sale occurred outside New Mexico, and the portion of the assessment attributable to these

receipts should be abated.

Sales by The Elaine Horwitch Gallery. Throughout the 1980s and early 1990s, The Elaine

Horwitch Gallery handled sales of the Taxpayer’s art work on a consignment basis. Horwitch had

galleries located in Santa Fe, New Mexico; Sedona, Arizona; Scottsdale, Arizona; and Palm Springs,

California. Under the parties’ business arrangement, the Taxpayer delivered his art work to

Horwitch’s Santa Fe gallery. From there, various pieces were distributed among the other galleries.

The decision as to where a piece of art work would be shown was made by Horwitch.

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When a piece of art work was sold, the Taxpayer received a check for his share of the sale

proceeds from Horwitch’s business office in Scottsdale. He was not told the name of the person who

purchased the item, nor was he told the location of the gallery from which it was sold. The Taxpayer

said this is a common practice within the art world: client lists are generally kept confidential in

order to prevent the artist from terminating his relationship with a gallery and dealing directly with

those clients known to be interested in the artist’s work. Unfortunately, this practice also prevented

the Taxpayer from being able to identify which art sales were made from Horwitch’s Santa Fe

gallery and which were made from its Arizona and California galleries. Although there is little doubt

that at least some sales of the Taxpayer’s art work occurred outside New Mexico, the Taxpayer has

not met his burden of identifying those sales. Consequently, all sales made by The Elaine Horwitch

Gallery must be treated as New Mexico sales subject to gross receipts tax.

New Mexico Sales Made on Consignment. In 1994, the Taxpayer had consignment

agreements with two New Mexico galleries: The Elaine Horwitch Gallery and Umbrello, Inc. The

Department disallowed a deduction of receipts from sales made under the agreements because the

Taxpayer did not have possession of a Type 2 nontaxable transaction certificate (NTTC) from each

consignee. The Department maintains that possession of an NTTC is required by the following

version of Regulation 3 NMAC 2.47.12 in effect during 1994:

3 NMAC 2.47.12 CONSIGNMENT SALES
Receipts of a consignor from the sale of tangible personal property handled on
consignment, when the sale is made by the consignee, may be deducted from
gross receipts if the consignee delivers a nontaxable transaction certificate to the
consignor pursuant to Section 7-9-47.

Section 7-9-47 NMSA 1978 provides a deduction for receipts from selling tangible personal property

for resale. As Department counsel conceded at the September 20, 2000 protest hearing, the

transactions at issue in this case were not sales for resale because the Taxpayer retained title to the

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art work until it was sold to the final customer. The Taxpayer’s arrangement with the various

galleries was more in the nature of a joint venture than a sale for resale. This characterization of a

consignment agreement finds support in the Department’s recent amendment to 3 NMAC 2.47.12,

which was published in the New Mexico Register on October 31, 2000. The amended version of the

regulation, renumbered as 3.2.205.12 NMAC, reads as follows:

3.2.205.12 CONSIGNMENT SALES
Receipts of a consignor from the sale of tangible personal property handled on
consignment, when the sale is made by the consignee, may be deducted from
gross receipts if the consignee delivers either a nontaxable transaction certificate
to the consignor pursuant to Section 7-9-47 NMSA 1978 or other proof
acceptable to the department that the consignor’s tangible personal property was
sold by consignment.

At the public hearing held on July 27, 2000 to consider the above amendment, the Department’s

representative acknowledged there was no statutory authority to require a consignor to have

possession of an NTTC. For this reason, the Department amended its regulation to allow consignors

to deduct receipts from sales of tangible personal property based on either an NTTC or other proof

acceptable to the department that the property was sold by consignment.

Given the fact that there has been no change in the underlying law concerning consignment

sales or in Section 7-9-47, the version of Regulation 3.2.205.12 NMAC published in the New

Mexico Register on October 31, 2000 should apply to the Taxpayer’s 1994 sales of art work by

consignment. The Department is entitled to change its construction of the law; it cannot change the

law itself. If the Department now maintains that a consignor is entitled to deduct receipts from

consignment sales without having possession of an NTTC, this deduction should be available for all

transactions during the period the law has remained unchanged. In this case, the Department has not

disputed that the 1994 sales of the Taxpayer’s art work by The Elaine Horwitch Gallery and

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Umbrello, Inc. were made by consignment. Accordingly, the Taxpayer is entitled to deduct his

receipts from these sales.

Rental of Studio Space. In 1994, the Taxpayer owned a 5,000 square-foot warehouse in

Santa Fe, New Mexico, which he used as a studio. The Taxpayer occasionally rented the studio to

film companies to use as sets for movies and commercials. The studio was rented on a daily and, in

some cases, an hourly basis. The Taxpayer gave up all control over the premises during the periods

it was rented. Because the film companies did not want details of their movies or commercials to

become known prior to screening, the Taxpayer was prohibited from entering the premises while it

was occupied by a renter. The Taxpayer allowed the film companies to tear down walls and make

other alterations to the building, provided they repaired the damage by the end of the rental period.

The Taxpayer required each company to obtain commercial general liability insurance for the period

it occupied the building, including coverage for any damage to the building.

The Taxpayer maintains he was leasing real property and is entitled to deduct his rental

receipts under Section 7-9-53(A) NMSA 1978. The Department argues that the Taxpayer’s short–

term rentals do not meet the requirements of a lease. It is the Department’s position that the

Taxpayer’s receipts were from granting a license to use real property and are subject to gross receipts

tax.

The Gross Receipts and Compensating Tax Act defines leasing as "any arrangement

whereby, for a consideration, property is employed for or by any person other than the owner of the

property, except that the granting of a license to use property is the sale of a license and not a lease."

Section 7-9-3(J) NMSA 1978. In Cutter Flying Service, Inc. v. Property Tax Dep't, 91 N.M. 215,

219, 572 P.2d 943, 947 (Ct. App. 1977), the court defined a lease as "an agreement under which the

owner gives up the possession and use of his property for a valuable consideration and for a definite

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term." Under a lease, the tenant must acquire some definite control and dominion of the premises.

Id., 91 N.M. at 219-20, 572 P.2d at 947-48.

Although not included in the definition of lease set out in the statute or in Cutter Flying

Service, the Department maintains that a rental of real property must continue for a period of at least

30 days in order to constitute a lease. The only authority the Department gives in support of its

position is Regulation 3 NMAC 2.53.8.2, which states that receipts from renting space in a trailer

park for a manufactured home or recreational vehicle for a period of under one month are subject to

gross receipts tax while receipts from renting the space for a period of over one month are

deductible. This regulation is based on the following provisions of Subsection (B) of Section 7-9-53:

B. Receipts received by hotels, motels, rooming houses, campgrounds,
guest ranches, trailer parks or similar facilities, except receipts received by trailer
parks from the rental of a space for a manufactured home or recreational vehicle
for a period of at least one month, from lodgers, guests, roomers or occupants are
not receipts from leasing real property for purposes of this section (emphasis
added).

The highlighted language, and the language the Department cites from 3 NMAC 2.53.8.2, relates

only to trailer parks and has no application to the general deduction for receipts from the lease of real

property provided in Subsection (A) of Section 7-9-53. While the short-term duration of the

Taxpayer’s rentals is atypical, this alone is not sufficient to find that his arrangement with the film

companies did not constitute a lease. See, Quantum Corp. v. State Taxation & Revenue Dep't, 1998-

NMCA-50, 125 N.M. 49, 956 P.2d 848.

Under the terms of the rental agreements, the Taxpayer gave up complete possession and

control of his premises for a definite period of time in return for the film companies’ payment of

rent. The Taxpayer did not have the right to enter the premises or revoke the agreements during the

admittedly short periods of time they were in effect. In addition, the Taxpayer required each

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company to obtain commercial liability insurance for the period it occupied the premises. Despite

the short-term nature of the Taxpayer’s rental agreements, the weight of the evidence favors a lease

over a license to use. The Taxpayer is entitled to deduct his rental receipts under Section 7-9-53(A)

NMSA 1978.

CONCLUSIONS OF LAW

1. The Taxpayer filed a timely, written protest to Assessment No. 2261120, and

jurisdiction lies over the parties and the subject matter of this protest.

2. The Taxpayer’s receipts from Mill Street Gallery and Peter Nosler are receipts from

sales made outside New Mexico and are not subject to gross receipts tax.

3. Pursuant to Regulation 3.2.205.12 NMAC, the Taxpayer is entitled to deduct his

receipts from New Mexico sales of tangible personal property made pursuant to the Taxpayer’s

consignment agreements with The Elaine Horwitch Gallery and Umbrello, Inc.

4. The Taxpayer’s receipts from renting his Santa Fe studio are deductible under Section

7-9-53 NMSA 1978 as receipts from the lease of real property.

For the foregoing reasons, the Taxpayer's protest is granted, and the Department is ordered to

abate Assessment No. 2261120 in full.

DATED November 3, 2000.

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