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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 395.1570
(h) Ownership "Substantially Similar"—"Real or Ultimate" Ownership
395.1570 Commencing Corporation and Sale of Stock. Corporation A transfers its manufacturing business together with the corporate name and logo to a new Corporation B solely in exchange for stock. Corporation A retains the distribution portion of the business and receives a license from Corporation B to use the company name and logo. Corporation A receives no other consideration other than first issue stock. After the transfer, Corporation A sells some or all of its stock in Corporation B to one or more buyers. Assuming there is a valid business reason for structuring the transaction in this manner, and its purpose is not merely to avoid sales tax, the initial transfer of assets to Corporation B is nontaxable as contribution to a commencing corporation. The later sale of Corporation B's stock is not a sale of tangible personal property. 8/9/93.