Davis Wire Corp. v. State Board of Equalization

The State Board of Equalization (Board) appeals from an order directing it to refund to plaintiff, Davis Wire Corporation (Davis), certain sales taxes paid under protest. The Board contends that a sale at retail of capital assets used to manufacture nonexempt goods is taxable even if the vendor has never before sold such equipment or such goods at retail. It observes that exempting such sales from taxation would cost the state substantial tax revenues since businesses would be able *763 completely to liquidate their assets without incurring any sales tax liability. We concur with the Board, and thus reverse the judgment below.

The case was tried upon stipulated facts which establish the following: The sales tax levied by the Board was based upon the retail sale of two mills that manufactured wire and paper products which the mills sold for resale. The sale of each mill was a retail sale of the entire business and of all of its assets.

The two mills so purchased by plaintiff Davis were North American Wire Mills (Wire Mills), a corporation that manufactured woven wire mesh products, and North American Mills (Paper Mills), a partnership that manufactured impregnated paper…