Tax Type
Retail Sales and Use Tax
Description
Occasional sale; Separate and distinct division defined
Topic
Exemptions
Taxability of Persons and Transactions
Date Issued
04-30-1990
April 30, 1990
Re: §58.1-1821 Application/Sales and Use Tax
Dear ********************
This will reply to your letter of January 30, 1990 in which you are seeking further consideration for the "occasional sale" exemption with respect to ***********************.
The issue raised in your letter is what constitutes a "business" as it relates to the occasional sale exemption. Virginia Code §58.1-602 defines an "occasional sale" to include, "the sale or exchange of all or substantially all the assets of any business and the reorganization or liquidation of any business." The term "business" is defined in Virginia Code §58.1-602 as "any activity engaged in by any person, or caused to be engaged in by him, with the object of gain, benefit or advantage, either directly or indirectly."
I have enclosed a ruling dated July 11, 1985 involving a corporation with a retail clothing division and a separate and distinct retail food division which helps illustrate the department's policy. The corporation sold its entire clothing business, but continued to operate its retail food business. This represents the sale of all the assets of an entire business, thus qualifying as an "occasional sale". In the instant case, the Taxpayer sold one of its grocery stores while maintaining and operating a second grocery store under the same name. As the two stores were engaged in the same type of sales and operated under the same trade name, they did not constitute separate businesses for purposes of the exemption.
After further consideration, I must maintain the position taken in my letter to you of September 5, 1989 which reflected the long-standing policy of the department, as evidenced by the enclosed rulings dealing with like or similar situations.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner