In Re China Peak Resort, Debtor. California State Board of Equalization v. Sierra Summit, Inc.

This case presents a challenge by the California State Board of Equalization (“the Board”) to the accepted rules of this circuit that California sales tax does not apply to the sale of assets of an estate in bankruptcy, California State Board of Equalization v. Goggin, 191 F.2d 726 (9th Cir.1951), (“Goggin I”), cert. denied, 342 U.S. 909 , 72 S.Ct. 302 , 96 L.Ed. 680 (1952), and that California may not impose a use tax on the purchaser of such assets when the use tax operates only when the sales tax has not been paid. California State Board of Equalization v. Goggin, 245 F.2d 44 (9th Cir.) (“Goggin II”), cert. denied, 353 U.S. 961 , 77 S.Ct. 863 , 1 L.Ed.2d 910 (1957).

In 1981 the federal receiver of China Peak Resort contracted for the sale of its assets for $3,530,000 to Snow Summit Ski Corp. (“Snow Summit”) and Snow Summit’s wholly owned subsidiary, Sierra Summit Ski Corp. (“Sierra Summit”). The assets included all fixed improvements and all personal property; skis were among the stock in trade conveyed. A bill of sale issued from the receiver to Sierra Summit for the property.

The Board assessed a sales tax of $55,-000 on the sale by the receiver. The bankruptcy court on…