N.Y. Comp. Codes R. & Regs. tit. 20 § 526.6
Tax Law, § 1101(b)(4)
Cross-references:
Special applications of resale exclusions, see the following sections of this Title: utility services, 527.2; storage, 527.6; food and drink, 527.8; hotel occupancy, 527.9; cups, plates and beverage containers used in or by restaurants, 528.20(d).
Example 1:
A store purchases shirts from a wholesaler to sell to its customers. The store does not pay its wholesaler a tax on its purchase of the shirts but collects the tax from its retail customers.
Example 2:
A bank has purchased premiums which will be given to depositors upon the opening of an account in a new branch. As the bank is not in the business of selling such items, and as it in fact does not sell such items to its customers, the sale to the bank of such items of tangible personal property is a retail sale which is taxable at the time of purchase. The bank has not purchased these items for resale.
Example 3:
A vendor purchases catalogs and distributes them to his potential customers for a minimal charge, which does not reflect the cost to him. He is the retail purchaser of the catalog, and is required to pay the tax thereon. He cannot charge his customer tax on the charge for the catalog.
Example 4:
A book publisher purchases leather for making book bindings and then sells the books directly to the public. The leather has become a physical component part of the books sold to the public and therefore has been purchased for resale by the book publisher and is not subject to the tax.
Example 5:
A company engaged in the printing of designs on unfinished fabrics for garment manufacturers purchases processing paper and detergents to be used in the manufacturing process. The fabric is rolled in processing paper and put through a pressure steaming operation where dyes are developed and are fixed into the fabrics. After the fixation process, the fabric is unrolled from the processing paper and washed with detergents. The washing process (during which a small portion of the detergent stays with the fabric) removes the dirt from the previous handling of the fabric, washes out surplus dyes and changes the texture of the fabric. As a portion of the detergent stays with the fabric, the detergent qualifies as a component part of a product for sale and the company may purchase the detergent exempt from the New York State and local sales tax. The processing paper is considered a supply used in connection with exempt machinery and may be purchased exempt from the New York State and local sales tax, except the taxes imposed within New York City by section 1107 of the Tax Law.
Example 6:
A watch repairman purchases a new stem and places it in a watch that he is repairing for a customer. The purchase of the stem by the watch repairman is a purchase for resale not subject to tax at the time of its purchase as it will become a physical component part of property upon which services were performed.
Example 7:
A service station purchases grease to be used for lubricating automobiles, without payment of tax as the grease will be transferred to the customers in connection with the performance of a taxable service.
Example 8:
The publisher of a stock market information service, which is not personal and individual in nature, may purchase the paper on which the service is printed for resale. The paper is actually transferred to his customers in conjunction with the performance of a service subject to tax.
Example 9:
A painter purchases plastic drop cloths and sandpaper and after painting a customer's premises, leaves the used drop cloths and sandpaper at the premises. The drop cloths and sandpaper, even though limited or no use after the painting, have not been purchased for resale as they are items used by the painter in performing a taxable service. The drop cloths and sandpaper are not actually transferred to the purchaser of the service in conjunction with the performance of the service.
Example 10:
A shoe repairman purchases leather to be used for resoling shoes. His purchase of the leather is not a purchase for resale, even though the leather will be transferred to the customer in connection with the performance of the service because the service he is performing is not taxable.
Example 11:
A dentist purchases gold to be used as fillings and crowns. The purchase by the dentist is not for resale, even though the gold is transferred to his patient, in the performance of his service.
Example 12:
A jeweler sends a customer's watch to a repairman for servicing. The charge by the jeweler to the customer is taxable. The charge to the jeweler by the repairman is not taxable because the service was purchased for resale by the jeweler.
The transfers described in this paragraph between partners and partnerships, and between corporations and stockholders, are excluded from the definition of "retail sale" because while the form of ownership of the property is changed, there is a continuity of interest in the property transferred.
Cross-reference:
See Part 537 of this Title.
Example 1:
A, B and C agree to deal in raw wool as partners. Each transfers $20,000 worth of tangible personal property to the partnership. These transfers are contributions which are not retail sales. Later C transfers other tangible personal property to the firm for cash. This is a taxable sale and not a contribution in consideration for a partnership interest.
Example 2:
D owns a pleasure boat. He sells E a one-half interest in the boat. The sale is a retail sale. Co-ownership without the carrying on of a business is not a partnership.
Example 3:
F, G and H are partners operating two stores. The partnership owns five station wagons. The partnership closes one store, and distributes one station wagon to each partner. The distribution of these station wagons constitutes a partial liquidation.
Example 4:
A corporation filed a certificate of incorporation with the Secretary of State on February 1, 1974. On March 10, 1976 it is decided that the corporation is to be activated, and on March 15, 1976 a stockholder transfers tangible personal property - a truck - to the corporation, in consideration of the issuance of shares of stock. The transfer is not excluded from the definition of retail sale, as it was not made upon the organization of the corporation.
Example 5:
A contribution of tangible personal property is made to a corporation upon its organization in consideration of the issuance of $3,000 in shares of stock and $7,000 in notes. The transfer is a retail sale to the extent of $7,000.
Example 6:
Corporation A is merged into Corporation B.
Example 7:
Corporation A and B are consolidated into Corporation C.
Example 8:
Corporation A owns all the stock of Corporation B. Corporation B is merged into Corporation A pursuant to the Business Corporation Law. Included among the property transferred is machinery, office equipment and supplies. The transfer of the tangible personal property to Corporation A, pursuant to the merger, is not subject to sales tax.
Example 9:
Corporation A will transfer its assets to Corporation B in consideration for B's issuance of shares of its stock. Corporation A will continue to exist for discharging its expenses, and then will be dissolved. The transfer of tangible personal property will be subject to tax, as it is carried out under a plan of reorganization but is not a statutory merger or consolidation.
Example 10:
Corporation A organizes Corporation B as a subsidiary. Upon the organization of Corporation B, Corporation C transfers certain tangible personal property to Corporation B in exchange for stock of Corporation A. This transfer is not excluded from the definition of retail sale, as the stock issued upon the organization of B was that of Corporation A, its parent.
Example 11:
On February 1, 1976, Corporation A transfers to its subsidiary, Corporation B, ten 1975 trucks, for a total of $40,000. The fair market value of the trucks is $100,000. Corporation A has made a taxable retail sale to Corporation B in the amount of $100,000.
Cross-reference:
Bulk sale provisions: See Part 537 of this Subchapter.
N.Y. Comp. Codes R. & Regs. Tit. 20 § 526.6