Tax Type
Retail Sales and Use Tax
Description
Determination of Exempt Status
Topic
Exemptions
Date Issued
12-15-1999
December 15, 1999
Re: Request for Ruling: Retail Sales and Use Tax
Dear***.
This is in response to your letter of November 22, 1999, in which you seek a ruling on behalf of an unidentified client (the "Taxpayer') regarding the application of the retail sales and use tax to a proposed transfer of assets.
FACTS
The Taxpayer is a stock corporation and operates a retail consumer business in Virginia and other states. Its assets in Virginia are comprised of over 280 Virginia stores and a distribution center. The Taxpayer proposes to transfer most of its Virginia assets to a newly-formed limited liability company ("LLC') in exchange for 100 percent of the membership interest in the LLC. This transfer will include the Taxpayer's Virginia distribution center and all but three of its Virginia stores. After the transfer to the LLC, which you indicate will take a number of months, the sole tangible assets in Virginia will be those three stores. Further, the Taxpayer will continue to own only nominal assets outside Virginia.
You suggest that this transaction will be exempt from Virginia retail sales and use tax as an occasional sale because the transfer of assets constitutes an exchange of all or substantially all the assets of the Taxpayer's business in Virginia.
RULING
Code of Virginia Sec. 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in Sec. 58.1-602. That section defines an "occasional sale' as:
If you have any questions regarding this issue, please contact ***** in the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/26062I
Re: Request for Ruling: Retail Sales and Use Tax
Dear***.
This is in response to your letter of November 22, 1999, in which you seek a ruling on behalf of an unidentified client (the "Taxpayer') regarding the application of the retail sales and use tax to a proposed transfer of assets.
FACTS
The Taxpayer is a stock corporation and operates a retail consumer business in Virginia and other states. Its assets in Virginia are comprised of over 280 Virginia stores and a distribution center. The Taxpayer proposes to transfer most of its Virginia assets to a newly-formed limited liability company ("LLC') in exchange for 100 percent of the membership interest in the LLC. This transfer will include the Taxpayer's Virginia distribution center and all but three of its Virginia stores. After the transfer to the LLC, which you indicate will take a number of months, the sole tangible assets in Virginia will be those three stores. Further, the Taxpayer will continue to own only nominal assets outside Virginia.
You suggest that this transaction will be exempt from Virginia retail sales and use tax as an occasional sale because the transfer of assets constitutes an exchange of all or substantially all the assets of the Taxpayer's business in Virginia.
RULING
Code of Virginia Sec. 58.1-609.10(2) provides an exemption from the tax for an occasional sale as defined in Sec. 58.1-602. That section defines an "occasional sale' as:
-
- 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.)
- 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.)
If you have any questions regarding this issue, please contact ***** in the department's Office of Tax Policy at *****.
Sincerely,
Danny M. Payne
Tax Commissioner
OTP/26062I
Rulings of the Tax Commissioner