Tax Type
Retail Sales and Use Tax
Description
Occasional sales; Sale of division
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
03-09-1989
March 9, 1989
Re: Ruling Request/ Sales and Use Tax
Occasional Sales
Dear***************
This will reply to your letter of October 11, 1988 seeking a ruling on the application of the sales and use tax to a proposed corporate reorganization of your Virginia client, (taxpayer). This also refers to additional information provided to a member of my staff in your letters of December 1 and 16, 1988.
FACTS
The taxpayer is a retailer of general merchandise through both stores and advertising in Virginia. The taxpayer also operates, as a separate division, several automobile service stations in Virginia and elsewhere. Under a plan of reorganization, the taxpayer recently bought a majority of the stock of an automotive products company. This automotive products company is now a separately incorporated subsidiary of the taxpayer.
To consolidate its automotive business activities in Virginia, the taxpayer is now considering selling all of the assets of its service station division to its automotive products subsidiary. After this proposed sale, the taxpayer will have divested itself of all of its service station assets in Virginia.
You ask whether this proposed sale of assets will qualify for tax exemption under Virginia Code §58.1-608(15).
RULING
Virginia Code §58.1-608(15) exempts from the sales and use tax an occasional sale, which is defined in Virginia Code §58.1-602(12) 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.
- 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.
Based on the facts presented in this case, the sale of all of the assets of the taxpayer's automotive service division to its automobile products subsidiary, in a single transaction, on a single occasion, will qualify for tax exemption as the occasional sale of all the assets of a business.
It should be noted however that if the proposed reorganization does not occur in a manner consistent with that set forth above, this ruling will be invalid.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner