January 6, 1999

You request a letter ruling on behalf of *************** (the "Purchaser") concerning the application of the Massachusetts sales and use tax to the sale of assets.

I. Facts

You represent the Purchaser, a Delaware corporation that desires to purchase fossil assets and hydroelectric assets (the "assets") from *************** and *************** (the "Sellers"). You state that the seller will sell its corporate assets, in the form of rights, title and interest in tangible real and personal property that is located in Massachusetts. You state that the property includes real estate (including buildings, structures, and other improvements thereon); fuels, supplies, materials and critical spares; machinery, equipment, vehicles, furniture, and other personal property; contracts, agreements, and personal property leases; transferable permits; and books and operating records.

You state that the sale of assets will take place in a single transaction. You also state that the Seller acquired the assets for its own use or consumption and has so used or consumed the assets. You state that the Seller has not been, and as of the closing date of the sale will not be, regularly engaged in the business of making sales at retail of assets similar to the assets to be sold.

II. Discussion of Law

Massachusetts imposes a five percent sales tax on all sales at retail in Massachusetts by any vendor, unless otherwise exempt. M.G.L. c. 64H, § 2. A complementary use tax is imposed on tangible personal property purchased for storage, use, or other consumption in Massachusetts, unless otherwise exempt. M.G.L. c. 64 I, § 2. A "sale" includes "any transfer of title or possession, or both, exchange, barter, lease, rental, conditional or otherwise, of tangible personal property . . . for a consideration, in any manner or by any means whatsoever." G.L. c. 64H, § 1.

Section 6(c) of M.G.L. c. 64H exempts from the Massachusetts sales tax "[c]asual and isolated sales by a vendor who is not regularly engaged in the business of making sales at retail; provided, however, that nothing contained in this paragraph shall be construed to exempt any such sale of a motor vehicle or trailer, as defined in section one of chapter ninety, or any such sale of a boat or airplane from the tax imposed under chapter sixty-four I." The same exemption is incorporated into the use tax statute. M.G.L. c. 64 I, § 7(b).

The general exemption is further explained in the casual and isolated sales regulation, as those sales of an infrequent, non-recurring nature made by a person not engaged in the business of selling tangible personal property. These include sales of items of tangible personal property which were acquired for use or consumption by a seller and not sold in the regular course of business engaged in by the seller. 830 CMR 64H.6.1. An example of exempt sales is the sale "of a business in its entirety by the owner, other than the sale of any motor vehicle, trailer, boat or airplane included therein." 830 CMR 64H.6.1.

The transfer of real estate as part of the transaction is subject to the deeds excise, found at M.G.L. c. 64D.

III. Conclusion

Based on the facts as you state them, the sale of assets from the seller to the buyer is a casual and isolated sale within the meaning of M.G.L. c. 64H, § 6(c), and is exempt from tax to the extent provided in the statute. While the seller is a seller of tangible personal property, which would normally exclude the seller from the casual and isolated sales exemption, the nature of this transaction is the sale of assets of the seller that were acquired for use or consumption by the seller and were not sold in the regular course of business engaged in by the seller. As stated in the exemption, the sale of any motor vehicle, trailer, boat, or airplane that is part of the sale of assets is subject to tax. The transfer of real estate included in the sale of assets is subject to the deeds excise.

Very truly yours,

/s/Bernard F. Crowley, Jr.

Bernard F. Crowley, Jr.
Acting Commissioner of Revenue

BFC:DMS:dt

LR 99-3