Opinion
No. 74-1008
Decided June 25, 1975.
Taxation — Sales tax — Transfer of partnership assets to corporation — Trucks and trailer titled to individual partner — Application for refund granted, when — No "consideration" paid for transfer.
APPEAL from the Board of Tax Appeals.
This is an appeal from a decision of the Board of Tax Appeals denying appellant's application for a refund of sales taxes.
Howard Roberts Sons, a family partnership, decided for business reasons to form the appellant corporation, Roberts Sons, Inc. All the partnership assets were transferred to the corporation. Among the assets transferred were four trucks and one flatbed trailer valued at $11,995.93. Title to these vehicles was in the name of Howard Roberts, Sr., the original operator of the business and one of the partners, although the vehicles were used for the partnership business and listed as partnership assets for tax purposes. To effect the transfer of the vehicles to the corporation, new certificates of title were required. The Clerk of Courts of Butler County assessed and collected sales tax. Appellant paid under protest and then filed this action for a refund of the tax.
A list of assets transferred to the corporation includes the five vehicles involved in this appeal. The total value of all assets so transferred (including the vehicles) was computed at $67,533. Each of the five stock subscribers (including Howard Roberts, Sr.) was a member of the Roberts family and each was issued 100 shares of stock at the total subscribed price of $67,533. No separate payment was made nor was any specific reference made to the transfer of the vehicles to the corporation other than in the listing of all personal property so transferred. No sales tax was assessed on other physical assets conveyed by the partnership to the corporation.
The Tax Commissioner, in denying appellant's application for a sales tax refund, found that the "* * * stock issued to the partners was consideration, in part, for the acquisition of the subject motor vehicles. Consequently a `sale' occurred and the tax was properly paid on the book value of the vehicles." Appellant contends that no consideration flowed from the corporation to either the partnership or Roberts, Sr., for acquisition of the vehicles; that, therefore, there was no sale of the vehicles; and that no sales tax was required to be paid under the requirements of R.C. 5739.01(B).
Upon appeal, the Board of Tax Appeals affirmed the order of the Tax Commissioner.
An appeal from the decision of the board brings the cause to this court for review.
Messrs. Imfeld, Imfeld Imfeld and Mr. Clem F. Imfeld, Jr., for appellant.
Mr. William J. Brown, attorney general, and Ms. J. Elaine Bialczak, for appellee.
The sole issue before this court is whether there was any "consideration" or "price" paid by the corporation for the vehicles.
A transfer of tangible personal property from one entity to another is not a "sale" unless there is a "consideration" or "price." See Kloepfers v. Peck (1953), 158 Ohio St. 577, 110 N.E.2d 560, paragraph one of the syllabus. There is nothing in the record in this case to indicate that there was any "consideration" or "price" paid for the vehicles. True, they were titled in the name of Roberts, Sr., but he received no more shares of stock from the corporation than the other four stock subscribers. The partnership transferred all its tangible personal property to the corporation, including the vehicles. Thus, if there was no finding by the Tax Commissioner that the transferred personal property was sold at a "price," requiring that a sales tax be paid, this same reasoning must be adhered to as to the transfer of vehicles under the circumstances developed in this cause.
Appellee contends that the name of the vendor on the certificate of title determines who owns a motor vehicle. In support of this position strong reliance is placed on Victory Express v. Bowers (1959), 169 Ohio St. 227, 158 N.E.2d 514. That case is distinguishable, for the reason that this court held in Victory Express, that there was a "sale." The facts in this case do not establish a "sale" because there was an utter lack of consideration or price paid by the vendee to the vendor, Roberts, Sr.
All partnership assets (including the vehicles) were transferred to the corporation and all five shareholders shared equally in the number and value of corporate shares. Therefore, there was no "consideration" or "price" paid for the vehicles, as defined in R.C. 5739.01(H):
"`Price' means the aggregate value in money of anything paid or delivered or promised to be paid or delivered in the complete performance of a retail sale * * *." Nothing in the record indicates that a "price" was paid for the vehicles and there was therefore no sales tax due for the transfer of the vehicles.
The decision of the Board of Tax Appeals, being unreasonable and unlawful, is, therefore, reversed.
Decision reversed.
O'NEILL, C.J., HERBERT, CORRIGAN, STERN, CELEBREZZE, W. BROWN and P. BROWN, JJ., concur.