Tax Type
Retail Sales and Use Tax
Description
Sale of corporate assets; Occasional sale
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
02-27-1987
February 27, 1987
Re: Ruling Request/ Sales and Use Tax
Dear **********************
This will reply to your letter of December 8, 1986 seeking information on the correct application of Virginia's retail sales and use tax to a sale of assets proposed by ************* (taxpayer).
FACTS
Pursuant to a plan of reorganization, the taxpayer proposes to transfer in a single transaction a sixty percent undivided interest in all of its assets located in Virginia, North Carolina and South Carolina to an outside Party in exchange for cash. Subsequent to this transaction the taxpayer will contribute its remaining forty percent asset interest and the outside party will contribute its sixty percent interest to a new corporation. According to the plan the taxpayer would then receive forty percent of the stock of the new corporation and the outside party would receive sixty percent of such stock. Furthermore, it is believed that the proposed transaction will qualify for non-recognition of gain or loss treatment under §351 of the Internal Revenue Code.
Based on the foregoing, the taxpayer requests a ruling whether its proposed transfer of assets will qualify for exemption from the sales and use tax as an "occasional sale" under §58.1-608(15) of the Virginia Code.
RULING
§58.1-608(15) of the Virginia Code provides an exemption from the tax for an "occasional sale" as defined in §58.1-602(12) of the Code. This latter section then defines an "occasional sale" as :
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a sale of tangible personal property not held or used by a seller in the course of an activity for which he is required to hold a certificate of registration, including the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business, provided such sale or exchange is not one of a series of sales and exchanges sufficient in number. scope and character to constitute an activity requiring the holding of a certificate of registration.
I hope this has responded to your question. but let me know if you have any further questions.
Sincerely.
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner