Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-106 - Casual or isolated sales - Business reorganizations

Current through Register Vol. 24-14, July 15, 2024
A casual or isolated sale is defined by
				RCW
				82.04.040 as a sale made by a person who is
				not engaged in the business of selling the type of property involved. Any sales
				which are routine and continuous must be considered to be an integral part of
				the business operation and are not casual or isolated sales.
Furthermore, persons who hold themselves out to the public as
				making sales at retail or wholesale are deemed to be engaged in the business of
				selling, and sales made by them of the type of property which they hold
				themselves out as selling, are not casual or isolated sales even though such
				sales are not made frequently.
In addition the sale at retail by a manufacturer or wholesaler
				of an article of merchandise manufactured or wholesaled by him is not a casual
				or isolated sale, even though he may make but one such retail sale.
Business and Occupation Tax
The business and occupation tax does not apply to casual or
				isolated sales.
Retail Sales Tax
The retail sales tax applies to all casual or isolated retail
				sales made by a person who is engaged in the business activity; that is, a
				person required to be registered under WAC
				458-20-101. Persons not engaged
				in any business activity, that is, persons not required to be registered under
				WAC 458-20-101, are not required to
				collect the retail sales tax upon casual or isolated sales.
However, persons in business as selling agents who are
				authorized, engaged or employed to sell or call for bids on tangible personal
				property belonging to another, and so selling or calling, are deemed to be
				sellers, and shall collect the retail sales tax upon all retail sales made by
				them. The tax applies to all such sales even though the sales would have been
				casual or isolated sales if made directly by the owner of the property
				sold.
A transfer of capital assets to or by a business is deemed not
				taxable to the extent the transfer is accomplished through an adjustment of the
				beneficial interest in the business. The following examples are instances when
				the tax will not apply.
(1) Transfers
			 of capital assets between a corporation and a wholly-owned subsidiary, or
			 between wholly-owned subsidiaries of the same corporation.
(2) Transfers of capital assets by an
			 individual or by a partnership to a corporation, or by a corporation to another
			 corporation in exchange for capital stock therein.
(3) Transfers of capital assets by a
			 corporation to its stockholders in exchange for surrender of capital
			 stock.
(4) Transfers of capital
			 assets pursuant to a reorganization under 26 USC Section 368 of the Internal
			 Revenue Code, when capital gain or ordinary income is not realized.
(5) Transfers of capital assets to a
			 partnership or joint venture in exchange for an interest in the partnership or
			 joint venture; or by a partnership or joint venture to its members in exchange
			 for a proportional reduction of the transferee's interest in the partnership or
			 joint venture.
(6) Transfer of an
			 interest in a partnership by one partner to another; and transfers of interests
			 in a partnership to third parties, when one or more of the original partners
			 continues as a partner, or owner.
The burden is upon the taxpayer to establish the facts
				concerning the adjustment of the beneficial interest in the business when
				exemption is claimed.
Use Tax
The use tax applies upon the use of any property purchased at a
				casual retail sale without payment of the retail sales tax, unless exempt by
				law. Uses which are exempt from the use tax are set out in RCW
				82.12.030.
Where there has been a transfer of the capital assets to or by
				a business, the use of such property is not deemed taxable to the extent the
				transfer was accomplished through an adjustment of the beneficial interest in
				the business, provided, the transferor previously paid sales or use tax on the
				property transferred. (See the exempt situations listed under the retail sales
				tax subdivision of this rule.)
Statutory Authority:
				  RCW
				  82.32.300. 83-07-034 (Order ET 83-17), §
				  458-20-106, filed 3/15/83; Order ET 75-1, § 458-20-106, filed 5/2/75;
				  Order ET 74-1, § 458-20-106, filed 5/7/74; Order ET 70-3, §
				  458-20-106 (Rule 106), filed 5/29/70, effective
				  7/1/70.