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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 395.1360
(g) "Substantially all the Property"—Transfer of
395.1360 Partnership Sale to Corporations. In order for a transaction to be exempt as an occasional sale under Revenue and Taxation Code section 6006.5(b), there are three necessary elements, each of which must be present. These are:
(1) the transfer must be of all or substantially all of the property,
(2) held or used in the course of an activity for which a seller's permit is required, and
(3) after the transfer the real or ultimate ownership of the property involved must be substantially similar (80 percent rule) to that which existed before the transfer.
Where a partnership transfers to a corporation certain property at a branch plant, the first essential element is lacking, as the fact that it is a branch plant indicates that the property transferred is only a portion of the assets held by the partnership. 4/7/53.