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As of September 1, 2001, the sale, storage, use, or other consumption of off-road commercial timber harvesting equipment and machinery is exempt from California sales and use tax. As of January 1, 2002, the exemption applies to the 5% state rate, but not to the .5% component authorized by the Bradley-Burns Uniform local sales and use tax law. If the exemption certificate was provided to the retailer by September 30, 2002, the purchaser was entitled to claim the partial exemption for the period of September 1, 2001 to June 30, 2002. (California Reg. 1534)


California has defined a technology transfer agreement as a legally binding contract that gives a third-party permission to manufacture and sell products that are otherwise protected under a copyright or patent the seller maintains. All revenue received for tangible personal property transferred in connection with a technology transfer agreement is taxable. Amounts allocated for revenue received for tangible personal property must be valued at fair market value. Revenue received specifically for rights granted for use of a patent or copyright are not taxable. (California Regulation, Reg. 1507.)


A formula has been created in California under the Alternative Method for Reporting Use Tax (AMRUT). The idea behind this program was to try and make it easier on taxpayers to calculate use tax. This formula includes a percentage of the sales of which use tax is involved. Authorization is required from the State Board of Equalization before it can be implemented. To be considered for the percentage reporting method taxpayers must complete an Audit Sampling Plan (Form BOE-472) first. For more information concerning AMRUT call (916) 324-2883. (Tax Information Bulletin, California State Board of Equalization, September 2002)


As of December 20, 2001, sales and use tax does not apply to the sale or use of medicines when sold or furnished by way of prescription, from pharmacist, physician, dentist, podiatrist, or health facility for the treatment of human beings. Prescription medicines sold to surgery centers where physicians furnished the medicines to patients are also included in this exemption. (California State Board of Equalization, Mem. Opin. 89000012890, December 20, 2001)


In California, a recent appellate court decision found Yamaha Corporation was subject to use tax on "gifts" or promotional items shipped out of state. Yamaha removed musical instruments from inventory, tax-free, and shipped them via common carrier to retailers and others as promotional gifts. The California court of appeals ruled that when the merchandise is delivered to a common carrier in California, the transaction is completed within California and therefore is subject to the state’s use tax (Yamaha Corp. of America v. State Board of Equalization, California Court of Appeals, Second Appellate District, Division Three, June 29, 1999)



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