Tax Type
Local Taxes
Property Tax
Description
Pleasure Yacht used by a Manufacturing Business
Topic
Exemptions
Local Power to Tax
Local Taxes Discussion
Property Subject to Tax
Date Issued
10-07-1987
[Opinion - Virginia Attorney General: 1987 at 508]
REQUEST BY: Honorable John P. Beale Commissioner of the Revenue for Westmoreland County Montross, Virginia 22520
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a pleasure yacht owned and used by a manufacturing corporation is subject to the local personal property tax imposed by §58.1-3500 et seq. of the Code of Virginia, or subject to the State intangible personal property tax imposed by §58.1-1100 et seq.
I. Applicable Statutes
Section 58.1-1100 provides:
Intangible personal property, including capital of a trade or business of any person, firm or corporation, except for merchants' capital as defined in §58.1-3510 which shall be subject to local taxation, is hereby segregated for state taxation only. [Emphasis added.]
Section 58.1-1101(A) provides, in pertinent part:
The subjects of taxation classified by this section are hereby defined as intangible personal property:
2. Capital which is personal property, tangible in fact, used in manufacturing, mining, radio or television broadcasting, dairy, dry cleaning or laundry businesses. Machinery and tools, motor vehicles and delivery equipment of such businesses shall not be defined as intangible personal property for purposes of this chapter and shall be taxed locally as tangible personal property according to the applicable provisions of law relative to such property . . . . [Emphasis added.]
II. Prior Opinion Suggests Intangible Personal Property Classification
A prior Opinion of this Office concludes that a boat owned by a manufacturing corporation and not used as "delivery equipment" should be categorized as intangible personal property and, therefore, subject to the State tax on capital. See 1977-1978 Att'y Gen. Ann. Rep. 411. When Title 58 was recodified, effective January 1, 1985, the State tax on capital (commonly referred to as "CNOT tax") became the State intangible personal property tax. Chapter 675, 1984 Va. Acts 1178, 1273. With regard to the issue raised in your request, the recodification resulted in no substantive change in the application of this tax.
III. Applicable Regulation Also Supports Intangible Personal Property Classification
Under the authority of §58.1-203, the Department of Taxation has promulgated regulations, which provide, in pertinent part, that
boats and aircraft of a manufacturing, mining, radio or television broadcasting, dairy, dry cleaning or laundry business and not utilized for delivery purposes were defined as a part of the capital of a trade or business by [Va.] Code [§.] 58-412 prior to repeal. They are now defined as intangible personal property exempt from local taxation.
Virginia Intangible Personal Property Tax Regulations, §630-16-1101(D)(2)(b) (1985) (copy enclosed).
IV. Conclusion: Pleasure Yacht Owned and Used by Business Engaged in Manufacturing Not Subject to Local Tangible Personal Property Tax
Based on the above-quoted statutory and regulatory language, I am in agreement with the conclusion reached in the 1977-1978 Att'y Gen. Ann. Rep., supra. It is my opinion, therefore, that a pleasure yacht owned and used by a manufacturing business is not subject to local tangible personal property taxation. Such property is classified as capital of a trade or business which is intangible personal property segregated for State taxation only.
Attorney General's Opinion