California Limits Sales Tax Exemption for Multi-Buyer Dental Practice Asset Sales

• The California Office of Tax Appeals ruled that selling a dental practice’s assets to multiple buyers under multiple contracts only partially qualified for a sales tax exemption.
• California’s occasional sale exemption is limited and does not apply if a seller makes three or more substantial sales within 12 months, requiring a seller’s permit.
• The taxpayer’s attempt to treat multiple contracts as a single transaction for exemption purposes was rejected; only the first two contracts qualified for the exemption.
• The sale of inventory is generally exempt as a resale, but non-inventory tangible personal property is only exempt under specific occasional sale rules, which vary by state.
• Both buyers and sellers should carefully analyze transfer tax obligations in asset sales, as state rules and exemptions can significantly impact tax liability.

Source: aprio.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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