Tax Type
Retail Sales and Use Tax
Description
Liquidation of assets
Topic
Taxability of Persons and Transactions
Date Issued
02-13-1987
February 13, 1987
Re: Ruling Request/Sales and Use Tax
Dear***********************
This will reply to your letter of June 17, 1986 and additional information submitted to members of my staff in a meeting held at the department on August 11, 1986, requesting a ruling on the correct application of the retail sales and use tax to certain transactions proposed to be engaged in by ************** (Taxpayer).
FACTS
The taxpayer is engaged in the road building and related construction business in the southeastern U.S. with its main offices in ******, Virginia. The taxpayer's shareholders recently agreed to a plan of liquidation whereby the taxpayer would completely end its corporate existence and business operations. Accordingly, the taxpayer will dispose of all of its assets including assets used in its road construction business such as heavy equipment, tools, trucks and automobiles. However, due to the large number of assets to be sold, the numerous locations of the assets, and the need to maximize its return on the sale of such assets, the taxpayer anticipates that it will require many transactions with several different purchasers over a period of time to effectively dispose of such assets.
Therefore, the taxpayer requests a ruling whether its plan of disposition of such assets would qualify for exemption from the tax as an "occasional sale" under §58.1-608(15) of the Virginia Code.
RULING
Section 58.1-608(15) of the Code exempts from the sales and use tax an "occasional sale" of tangible personal property, as defined in §58.1-602(12). 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.
- 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.
In addition, the sale of assets by the asphalt contractor in my January 16, 1986 ruling is distinguishable from the facts in this case since that sale was 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.
It should be noted further that the only items proposed to be sold by the taxpayer in this case which would be subject to the retail sales and use tax are those items of tangible personal property not also registered with the Department of Motor Vehicles.
I hope all of the foregoing has been of assistance to you, but let me know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner