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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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395.0000 Occasional Sales—Sale of a Business—Business Reorganization—Regulation 1595
Annotation 395.0673.250
(c) Series of Sales—"Number, Scope and Character"
395.0673.250 Sale of Assets by Medical Laboratory. A medical laboratory located in California recently sold its assets to a medical center also located in California. The laboratory is in the business of analyzing medical samples and providing reports to its clients. It does not hold a seller's permit and has not made retail sales of tangible personal property during the 12 months preceding the sale of the assets to the medical center, with the exception of the following activities:
$100—sale of laboratory equipment.
$250—sale of human blood to another laboratory.
$200—one sale of vehicle for on-road use subject to registration with the Department of Motor Vehicles.
$262,042—The final sale of assets of business in one transaction to the medical center, including vehicles.
A person who makes three or more sales for substantial amounts in any period of 12 months is required to hold a seller's permit, as is a person who makes a substantial number of sales for relatively small amounts. Sales of vehicles required to be registered under the Vehicle Code are not counted in determining the number of sales for this purpose when the seller is not a person required to hold a permit by virtue of the number of its sales of vehicles. Thus, the laboratory's sale of the vehicle for $200 is excluded from the calculation. In addition, sales of property of a type which would never be subject to sales tax (even at retail) are also not counted for these purposes. Sales of human blood fall within this category. (Revenue and Taxation Code section 33.) This means that, for purposes of determining whether the final sale of assets was one of a series of sales requiring the holding of a seller's permit, the laboratory made a total of two sales of tangible personal property. As such, the final sale was not one of a series of sales requiring the holding of a seller's permit. Therefore, the final sale of assets (other than its sale of vehicles included in that final sale) was an exempt sale under sections 6006.5(a) and 6367. 8/29/96.