Coast Elevator Co. v. State Board of Equalization

This case presents the question of whether costs for labor and overhead attributable to work performed in the assembly of components of an elevator system prior to attachment to realty are properly subject to the sales tax. We conclude they are and affirm the judgment.

Facts

Appellant Coast Elevator Company (Coast) is a licensed contractor in the field of elevator construction and installation. Coast installs elevator systems *208 designed specifically for the buildings in which they operate. The price charged is a lump sum which includes the costs of the system components (which are either fixtures or materials) and charges for the labor involved in installing or affixing them to the building.

When Coast is notified its bid has been accepted, it purchases from various vendors all of the component parts of the elevator system. Those components arrive ready for installation and when installed by Coast are unchanged in form or function. Coast performs certain preinstallation assembly of components in order to facilitate their affixation to the structure. William Shrum, Coast’s president, testified that workers at Coast’s factory mounted certain components on panels with…