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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 4. Exemptions
Article 1. General Exemptions
Section 6362.5
6362.5. Master tapes or master records. (a) There are exempted from the taxes imposed by this part the gross receipts from the sale or lease of, and the storage, use, or other consumption in this state of, master tapes or master records embodying sound, except amounts subject to the taxes imposed by other provisions of this part paid by a customer in connection with the customer's production of master tapes or master records to a recording studio for the tangible elements of such master records or master tapes.
(b) For purposes of this section:
(1) "Master tapes or master records embodying sound" means tapes, records, and other devices utilized by the recording industry in making recordings embodying sound.
(2) "Amounts paid for the furnishing of the tangible elements" shall not include any amounts paid for the copyrightable, artistic or intangible elements of such master tapes or master records, whether designated as royalties or otherwise including, but not limited to, services rendered in producing, fabricating, processing, or imprinting tangible personal property or any other services or production expenses in connection therewith which may otherwise be construed as constituting "sale" under Section 6006.
(3) "Recording studio" is a place where, by means of mechanical or electronic devices, voices, music, or other sounds are transmitted to tapes, records, or other devices capable of reproducing sound.
History—Added by Stats. 1975, Ch. 1116, operative January 1, 1976. Stats. 1982, Ch. 951, in effect January 1, 1983, added the balance of subsection (2) of subdivision (b) after "otherwise."
Master sound tapes.—1982 amendment did not make 1975 enactment of section 6362.5 retroactive to years prior to enactment. Taxpayers' agreements with independent producers for master tapes were sales agreements, not employment contracts. Master tapes were physically useful in manufacturing process. Sales of master tapes may constitutionally be taxed differently than leases of movies. Capitol Records, Inc. v. State Board of Equalization (1984) 158 Cal.App.3d 582.
Master tapes are tangible personal property.—The true object of contracts between a record company and various artist companies was the production and acquisition of master tapes not the procurement of recording services. A and M Records, Inc. v. State Board of Equalization (1988) 204 Cal.App.3d 358.