Tax Type
Retail Sales and Use Tax
Description
Occasional sales, including mergers; Purchase of all assets of a business
Topic
Taxability of Persons and Transactions
Date Issued
04-05-1996
April 5, 1996
Re: Request for Ruling: Retail Sales and Use Tax
Dear******************
This will reply to your letter of October 4, 1995 in which you request a ruling as to the retail sales and use tax application to the sale of a corporate business operation located in the State of Virginia.
FACTS
An out-of-state corporation (the "Taxpayer") has it's corporate business operations physically located in the State of Virginia. The owners are planning to form an out-of-state limited liability company (LLC) and will sell all of the Virginia corporate business operation, including real and tangible personal property, to the LLC. The assets will be sold at fair market value and will consist of all the inventory, furniture and fixtures, machinery and equipment, and land and buildings. The Taxpayer is requesting a ruling on whether the Virginia retail sales and use tax will apply to such sale.
RULING
Code of Virginia § 58.1-609.10.2 provides a sales and use tax exemption for "an occasional sale, as defined in § 58.1-602." Code of Virginia § 58.1-602 defines occasional sale as follows:
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- "Occasional sale" means 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. (Emphasis added).
Based on the information provided, it is apparent that the sale in question constitutes the sale of all or substantially all the assets of a business. For this reason, I find that the sale in question would constitute an occasional sale and would be exempt from the retail sales and use tax. In addition, any pro-rated real estate taxes owed by the acquiring LLP would be administered by the locality in which the property is located.
If you should have any further questions, please feel free to contact **** Office of Tax Policy, at *******.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/10356K
Rulings of the Tax Commissioner