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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
L
330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2529
(a) In General
330.2529 Out-of-State Use of Leased Property. A company in the business of renting theatrical rigging equipment purchases the equipment without paying tax. The majority of the rentals are to musical touring groups or corporate shows. The actual use of the equipment takes place all over the U.S. and sometimes outside the U.S. The customers are also located all over the U.S. and abroad. Every possible location combination occurs (i.e., client outside the state with use inside the State, client inside the State with use both inside and outside the state, etc.).
Use tax applies only with respect to those periods the leased property is situated in this state. If the property is delivered to a carrier for shipment out of state and the lessee delivers the property to a carrier for delivery back to the company, (the lessee having no possession of the leased property in this state) no tax applies. If the contract provides that the property will not be used in this state, but the lessee acquires possession in this state (that is, the lessee picks up the property, drops off the property, or both) use tax applies to any such periods of possession in this state. If the property will be used both inside and outside California by a touring lessee, the tour itinerary would be sufficient evidence of out-of-state use provided that the leased property was used inside and outside California in conformity with the itinerary. The itinerary should be retained in the lessor records. Rentals for any period the property is situated in California are subject to tax even if the property is between engagements or en-route. 11/24/87; 2/25/88.