87-0004 - Sales

BEFORE THE STATE TAX COMMISSION OF UTAH

_____________________________________

XXXXX

Petitioner, :

v. : INFORMAL DECISION

AUDITING DIVISION OF THE :

UTAH STATE TAX COMMISSION, :

Respondent. : Appeal No. 87-0004

: Account No. XXXXX

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STATEMENT OF CASE

This matter came before the Utah State Tax Commission for an Informal Hearing on XXXXX. James E. Harward, Hearing Officer, was scheduled to hear the matter. Prior to the hearing, the hearing officer was notified by the representative of XXXXX that the matter was to be decided on the record without the benefit of an oral hearing.

FACTS

On XXXXX, XXXXX formed a partnership, XXXXX, to engage in the sale of drilling fluids. As part of the partnership formation various property was contributed to the partnership by the partners including motor vehicles and trailers located in Utah. A notice of deficiency was then issued by the Utah State Tax Commission Auditing Division on the transfer of those motor vehicles to the partnership. The Petitioner argues that Section 59-15-2 of the Utah Code exempts that transferred from sales tax on the grounds that it is an isolated and occasional sale.

DISCUSSION

Utah Code Ann. 59-15-2 provides that "except that any transfer of any motor vehicle in a business reorganization where the ownership of the transferee organization is substantially the same as the ownership of the transferor organization shall be considered an isolated or occasional sale." This Section provides for two criteria to be met for the transaction to be isolated or occasional sale: one, that the business be reorganized, and two, the new organization is substantially the same as to the ownership as the original organization.

The facts before the Commission are simply that a partnership was created by two corporations. There is no evidence before the Commission which would indicate that that partnership was substantially the same as the original. There is no evidence that the partnership is a reorganization or whether or not the ownership is substantially the same. Therefore the Commission has no other alternative to find that the Petitioner has failed to meet its burden of proof and thereby denies the request and affirms the assessment and a notice of deficiency.

DATED this 17 day o November , 1987.

BY ORDER OF THE STATE TAX COMMISSION OF UTAH.