Document Number
95-79
Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Federally exempt reorganization of assets
Topic
Taxability of Persons and Transactions
Date Issued
04-12-1995
April 12, 1995



Re: Request for Ruling: Retail Sales and Use Tax


Dear***************

This will reply to your letters of January 4 and February 23, 1995 in which you request a ruling on behalf of *************(the Taxpayer). Specifically, your request is in regard to the application of the occasional sale exemption to the transfer of assets by the Taxpayer to subsidiaries.
FACTS

The Taxpayer operates as a chain of retail stores and, as part of its operation, maintains warehousing functions and upper tier management activities in Virginia. The Taxpayer plans to transfer the assets of its warehousing function, and the assets of its management activities, to two newly-formed subsidiaries in exchange for all of the issued and outstanding shares of those subsidiaries. The assets to be transferred comprise approximately 35 percent of the Taxpayer's total assets, and the asset transfer will qualify for nonrecognition of income under Internal Revenue Code §(I.R.C.) 351.
RULING

Code of Virginia §58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in §58.1-602. That section defines an "occasional sale" as:
    • A sale of tangible personal property not held or used by the 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 administering this statute, the department has published Virginia Regulation 630-10-75 which indicates that an occasional sale includes "the sale or exchange of all or substantially all the assets of any business; or the reorganization or liquidation of any business." (Emphasis added)

While the instant transaction is not the sale or exchange of all or substantially all the Taxpayer's assets, the l.R.C. § 351 tax-exempt reorganization of assets for stock in the commencing subsidiaries is a qualifying "reorganization" for purposes of the occasional sale exemption.

If you have additional questions regarding this issue, you may contact***************

                        • Sincerely,



                          Danny M. Payne
                          Tax Commissioner

OTP/9123

Rulings of the Tax Commissioner

Last Updated 08/25/2014 16:46