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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
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395.0000 Occasional Sales—Sale of a Business—Business Reorganization—Regulation 1595
Annotation 395.1768
(h) Ownership "Substantially Similar"—"Real or Ultimate" Ownership
395.1768 Transfer Between Related Entities. A and B together with Corporation C each own one-third of a Limited Liability company (LLC). The same three own a one-third interest in another Company D except that A and B own their interests through a different corporation (Holding). Company D will form a wholly-owned subsidiary (NEWCO). NEWCO will purchase all of the assets of the LLC.
In the final analysis, A, B and C hold a one-third interest in the LLC and each will hold a one-third interest in NEWCO. Since the tracing of ownership through multiple levels of ownership [e.g., the "grandparent" of the sellers and the "great grandparent" (Holding) of the purchaser] leads to the same person, for purposes of the occasional sale definition in section 6006.5(b) the ownership will be the same before and after the transfer even though a tracing only through the "grandparent" reveals no common ownership. 4/17/97.