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BTLG Table of Contents > Sales and Use Tax Annotations > R > 490.0000 Returns, Defects and Replacements > Annotation 490.0510.350

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R

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490.0000 Returns, Defects and Replacements—Regulation 1655

Annotation 490.0510.350

(c) Warranties

(1) In General

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490.0510.350 Buyer's Warranty. A California resident purchased from an Arizona dealer a boat manufactured by a company in Wisconsin. After the purchase, the buyer discovered a crack in the boat. The Wisconsin company agreed to have the crack repaired under a buyer's warranty (i.e., mandatory warranty included in the selling price). The boat was taken to a boat repair shop in California.

Since the crack was repaired under a mandatory warranty, there is no tax owing on the purchase of parts either by the repairer or the manufacturer. The furnishing of parts by the repairer would be a nontaxable sale for resale. The purchaser paid use tax on the purchase price of the boat, including the mandatory warranty, at the time it was registered with DMV. 3/10/92.