New Mexico Administrative Code › Title 3 - TAXATION › Chapter 2 - GROSS RECEIPTS TAXES › Part 116 - EXEMPTION - GROSS RECEIPTS TAX - OCCASIONAL SALE OF PROPERTY OR SERVICES › Section 3.2.116.9 - LICENSE TO DO BUSINESS OR HOLDING OUT TO DO BUSINESS

Current through Register Vol. 35, No. 13, July 16, 2024
A. 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.