Laws, Regulations and Annotations
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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 395.1243
(f) Sale of a Business Generally
395.1243 Sale of Business. An escrow instruction for the sale of a business provided that the total selling price was $475,000 and that the buyer would reimburse the seller for sales tax on fixtures and equipment based on a valuation of $20,000 or as required by the State Board of Equalization. The seller's books stated that the fixtures and equipment had a depreciated value at the time of the sale of $80,027.
Sales tax is normally based upon the selling price of tangible personal property as agreed upon by the parties. No sales agreement has been submitted and the escrow instruction is ambiguous. The clause with respect to sales tax appears to be included primarily for the purpose of stating who is liable for the tax. If the buyer can show from his income tax records that he actually used the claimed $20,000 price for income tax depreciation purposes, that value should be accepted. 2/8/80.