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BTLG Table of Contents > Sales and Use Tax Annotations > G > 295.0000 Gross Receipts > Annotation 295.0022

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G

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295.0000 Gross Receipts

Annotation 295.0022

(a) General

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295.0022 Advance Payments by Vendor. A customer agrees to use a vendor as its exclusive supplier for the fabrication of positive release prints to be used by the customer in the distribution of motion pictures. The vendor will bill the customer at its regular list price. The vendor agrees to pay the customer a stated sum upon execution of the agreement. The vendor also agrees to pay the customer an amount equal to 15 percent of the total amount of all invoices. The amount is to be paid to the customer monthly.

Under these arrangements, the advance payment and the monthly payments are in the nature of an interest-free loan. Thus, the payments made by customer would consist of two components, the return of the advance payment and a payment for services rendered. In other words, the measure of tax consists only of the net amount paid by customer, which, in this case, is the contract amount less the return of the "advances." 3/23/90.