N.M. Admin. Code § 3.2.116.9
Current through Register Vol. 35, No. 17, September 10, 2024
Section 3.2.116.9 - LICENSE TO DO BUSINESS OR HOLDING OUT TO DO BUSINESSA. Any person who holds a license to sell or lease property or to carry on services or who regularly advertises property or services for lease or sale is holding out as engaged in the business of selling or leasing the same or similar property or services.B. The following examples illustrate the application of Section 7-9-28 NMSA 1978. (1) Example 1: D is a doctor who pumps water for private use from a well. D purchases a new pump for the well and sells the old pump to B. D does not have to pay the gross receipts tax on the sale to B. D is not in the business of selling pumps. This is an isolated or occasional transaction by one who is not engaged in the business of selling pumps.(2) Example 2: The T club is a nonprofit association which is not exempted from the federal income tax pursuant to Section 501(c)(3) of the United States Internal Revenue Code of 1986. In order to raise money for its other activities, it sponsors a matched roping contest once each year. The T club is not organized for the purpose of conducting roping contests. The very nature of the roping contest requires that it be conducted for only a short time each year, but the roping contest is not isolated or occasional within the meaning of the statute, and the receipts of the T club from the roping contest are subject to the gross receipts tax.(3) Example 3: G, a homeowner, holds a garage sale every Wednesday for neighbors as consignee of the goods to be sold and claims that the receipts are not subject to gross receipts tax. G is regularly engaged in business and the sales are not isolated or occasional. Therefore G is subject to gross receipt tax.(4) Example 4: L, an attorney, is a member of the bar of New Mexico. L maintains an office in Albuquerque, but L's main source of income is derived from a salaried position as house counsel for a large industrial firm. L takes one or two criminal cases a year to maintain abilities as a trial lawyer. While L is not regularly engaged in business as a criminal lawyer, L is holding out as licensed to practice law in New Mexico and, therefore, L's receipts from the cases taken are taxable gross receipts.(5) Example 5: K purchases vacant land, builds a home, lives in it for a few months, sells it, and then repeats this process three months later. K's activity is not an isolated or occasional transaction. K is regularly engaged in the business of selling homes because of the frequency of the sales. Therefore, K's receipts from the sale of the improvements are subject to gross receipts tax.(6) Example 6: Z ski club is a nonprofit organization which is sponsoring a ski swap and sale. X, a disenchanted skier, has decided to sell all of X's ski equipment at the club's ski swap and sale. The sale is an isolated or occasional sale, because X is neither regularly engaged nor holding out as engaged in the business of selling or leasing skis, ski equipment, or similar property. Therefore, X's receipts from the sale are exempt from the gross receipts tax. The receipts of the ski club are not subject to the gross receipts tax, because the ski club is merely providing the opportunity for its members to sell or trade their ski equipment. The club retains no receipts from this activity.(7) Example 7: T is an auctioneer who sells property on a commission or fee basis. X, an individual not engaged in business, takes an old lawn mower to T in order for T to auction it off at the weekly auction. The receipts X derived from such sale are exempted from the gross receipts tax because the sale is isolated and occasional and X is neither regularly engaged nor holding out as engaged in the business of selling or leasing the same or similar property.N.M. Admin. Code § 3.2.116.9
9/29/67, 12/5/69, 3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 4/2/86, 11/26/90, 11/15/96; 3.2.116.9 NMAC - Rn, 3 NMAC 2.28.9 & A, 5/15/01