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Newco Leasing, Inc., et al. v. State Board of Equalization … (1983)

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Exempt Lease of Mobile Transportation Equipment Does Not Include Transfer of Ownership of Vehicles Already Leased

Taxpayers were motor vehicle leasing companies that acquired mobile transportation equipment from other leasing companies. Taxpayers assumed the outstanding leases on the equipment, and also assumed the transferors' unpaid obligations to their lenders for the equipment.

The Board determined use tax on the purchases, measured by the amounts owed on the loans. Taxpayers sought refunds, and the trial court entered judgment for the Board.

The court of appeal affirmed. The court held that the exclusion from the definition of "sale" for leases of mobile transportation equipment did not apply to these transactions. Taxpayers did not lease the equipment from the transferors, but rather acquired all the indicia of ownership of the equipment. The court also held that the consideration paid for the equipment was the taxpayers' assumption of the liabilities owed by the transferors, and tax was properly measured by those amounts. Newco Leasing, Inc., et al. v. State Board of Equalization (1983) 143 Cal.App.3d 120.