University of Vermont AAHS

Agnew v. California State Board of Equalization

California Court of Appeals
UNPUBLISHED,
2003 WL 21464990
June 25, 2003

Summary of Opinion

Agnew and another owned a successful racehorse—Desert Wine—which they wished to syndicate for racing and breeding.  They sold shares in the horse to a number of persons.  The defendant taxing authority determined that sales taxes were due on the sales of those interests in the racehorse.

After extensive litigation, in this opinion the Court of Appeals holds that the syndication agreement called for the sale of tangible personal property—shares of the racehorse.  As such the syndication was based on transactions for which sales taxes were due.

Text of Opinion

 A taxpayer syndicated a thoroughbred horse but did not pay sales or use tax on the transaction. When the State Board of Equalization discovered the syndication, it determined that the transaction resulted in taxable sales of tangible personal property and issued a notice of determination for taxes plus interest due. After pursuing administrative remedies, the taxpayer filed a claim for refund in the trial court which concluded that the tax and interest amount had been properly assessed. In this appeal, the taxpayer contends that the transaction did not involve the sale of tangible personal property on a number of grounds and raises several other challenges to the trial court's decision. Although we agree that the transaction involved the sale of tangible personal property and is therefore taxable, we agree with the taxpayer that certain portions of the tax and interest amounts assessed were improper. Accordingly, we affirm in part and reverse and remand in part with instructions.

FACTUAL AND PROCEDURAL SYNOPSIS

 The facts are essentially undisputed. In 1981, in Kentucky, Washington resident Dan Agnew bought a thoroughbred yearling he named Desert Wine. In 1982, before Desert Wine had ever raced, Agnew sold a one‑half interest in the horse to Fred Sahadi with the understanding that Agnew would manage Desert Wine's racing career and, if Desert Wine was successful enough to have stallion prospects, Sahadi would then manage the horse's breeding career. Desert Wine was shipped to Sahadi's Cardiff Stud Farm in California to train, won three or four races, raced second in a number of others and was ranked the fifth best two‑year‑old in the country after the 1982 racing season.

 In 1983, as a three‑year‑old, Desert Wine ran second in the Kentucky Derby and second in the Preakness. By the end of the first half of 1984, Desert Wine had won three "grade one" races in California and earned $700,000. Heading into three more races (the Eddie Reed Handicap, the Arlington Million and the Breeder's Cup with a purse of $3 million), he was "probably considered the top handicap horse in the country."

 Given Desert Wine's success and future prospects, Agnew and Sahadi decided to syndicate Desert Wine, combining elements of both racing and breeding syndications. More particularly, syndicate members would share in the profits (or losses) of Desert Wine's remaining races and, after his retirement from racing, could each send a mare to be bred with Desert Wine. Attorney Richard Craigo, a California certified tax specialist with equine law expertise, prepared the 38‑page Desert Wine Syndicate Agreement and related documentation.

 Under the agreement, "ownership" of Desert Wine was represented by 40  "fractional interests"‑‑30 initially owned by Agnew and Sahadi as tenants in common, 5 owned by Agnew and 5 owned by Sahadi. "Purchaser[s]" bought 26.5 of the 30 fractional interests held by both Agnew and Sahadi for $325,000 per fractional interest (a $65,000 down payment plus four more annual installments of $65,000 evidenced by a promissory note and UCC‑1 Financing Statement in favor of Agnew and Sahadi).

 Of the 26.5 fractional interests or shares sold, during 1984, 11 were sold while Desert Wine was outside CA (in Washington), and 14.5 were sold while Desert Wine was in California; one share was sold in 1985. Agnew and Sahadi each had the power to sell only his respective half‑share and, in one instance, Agnew sold one half‑share only to Sahadi for resale. Agnew received only half the consideration for each share sold; Sahadi was paid for the sale of 26 half‑ shares, and Agnew was paid for the sale of 27 half‑shares. Neither sold any of the five shares held individually.

 Agnew did not file a California tax return regarding the Desert Wine transaction, but, in a 1986 sales tax audit of Sahadi's Cardiff Stud Farm, the Board discovered the syndication. Sahadi provided the Board with one copy of the syndication agreement pertaining to one of Sahadi's five individually‑owned fractional interests in Desert Wine. Although the agreement stated that Agnew and Sahadi together owned 30 of the 40 total fractional interests as tenants in common and that each owned 5 individually, because the Board was auditing Sahadi and the agreement stated that the fractional interest identified in the agreement ("Fractional Interest No. 37 of 40") belonged to Sahadi, the Board did not concern itself with Agnew at that time, and Agnew had no knowledge of the Board's action regarding Desert Wine.

 The Board did not contact Agnew about California sales tax on Desert Wine until 1992. That April, the Board served Agnew with a Notice of Determination assessing sales tax in the amount of $516,750 "for unreported taxable syndication shares of the race horse Desert Wine" plus interest of $516,590‑‑an amount nearly equal to the tax itself‑‑for a total of $1,033,340. Agnew challenged the determination through administrative proceedings. He filed a petition for redetermination, requested an appellate conference and sought a formal hearing before the Board when his earlier efforts were unsuccessful.

 In 1995, the Board issued a new Notice of Determination concluding that Agnew had been properly assessed $516,750 for sales tax on all 26.5 fractional interests plus $708,649 in interest which had continued to accrue. (He was granted relief from a $51,000 penalty.)

 Agnew paid the sales tax of $516,750 under protest and filed a claim for refund but did not pay the substantial interest amount. Because the Board maintained that he was required to pay both the tax and interest in order to pursue his refund claim, Agnew filed a declaratory relief action, challenging the validity of the Board's policy in this regard. (Agnew v. State Bd. of Equalization (Super. Ct. Los Angeles County, 1996, No. BC137289.) Agnew appealed from the trial court's dismissal of his action after it sustained the Board's demurrer, and we reversed, finding neither constitutional nor statutory authority for the Board's policy. (Agnew v. State Bd. of Equalization (Agnew I ) (1997) 55 Cal .App.4th 1479, review granted Oct. 1, 1997, S063339).

 In the meantime (in 1996), Agnew had filed this action seeking a refund of the $516,750 tax amount he had paid, but the trial court again dismissed Agnew's complaint, finding he had failed to exhaust his administrative remedies by failing to prepay the interest on the assessed tax deficiency. (Agnew v. State Bd. of Equalization, Super. Ct. Los Angeles County, 1996, No. BC153854.) On Agnew's appeal from that determination, we again reversed for the reasons stated in Agnew I. (Agnew v. State Bd. of Equalization (Agnew II ) (Dec. 8, 1997, B109418) [nonpub. opn.], review granted Feb. 28, 1998, S067358.)

 While both cases were pending before our Supreme Court, the Board levied on Agnew's account at Santa Anita Race Track, collecting $8,025. Because the Board had obtained a number of other liens on Agnew's property, compromising his ability to conduct his business, Agnew then paid another $645,792 in satisfaction of the total interest amount (because Sahadi had paid $60,000 which was applied to the interest liability on the Desert Wine transaction).

 In October 1998, Agnew submitted a claim for refund of the entire amount paid. The Board failed to act on this claim. In August 1999, our Supreme Court affirmed our decision in Agnew I, holding that the payment of accrued interest on a tax deficiency is not a prerequisite to either an administrative refund claim or a subsequent action for refund of taxes. (Agnew v. State Bd. of Equalization (1999) 21 Cal.4th 310, 314.) In light of its decision, the Supreme Court dismissed its review of this case and remanded it to us. We entered a remittitur and our decision became final.

 In light of the Supreme Court decision, Agnew immediately requested that the Board refund the full amount of interest he had paid. When it refused, he filed an amended complaint in this case, seeking to recover the $516,750 tax assessment plus the entire amount of interest the Board retained, and the Board answered.

 After a five‑day bench trial, the trial court issued a tentative decision in the Board's favor. Agnew requested a statement of decision, and the Board submitted one. Agnew then objected to certain portions of the decision and requested findings on specified issues. In April 2001, the trial court signed the Board's proposed statement of decision without modification and entered judgment. Agnew appeals.

DISCUSSION

 I. In Syndicating Desert Wine, Agnew Transferred Title to Tangible Personal Property and Incurred Tax Liability for the Transaction as a Result.

 A. Applicable Statutory and Case Law.

 "California law imposes a retail [or sales] tax on 'the gross receipts ... from the sale of all tangible personal property....' " (Preston v. State Bd. of Equalization (Preston ) (2001) 25 Cal.4th 197, 208, citing Rev. & Tax Code, § 6051.) As we stated in Cal‑Metal Corp. v. State Bd. of Equalization (Cal‑Metal ) (1984) 161 Cal.App.3d 759, 764, "[S]ection 6006, subdivision (a) broadly defines a 'sale' as '[a]ny transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of tangible personal property for a consideration....' This definition coincides with the common law definition of a 'sale' and parallels the Commercial Code definition." (Ibid., footnote omitted; Select Base Materials. v. State Board. of Equalization (1959) 51 Cal.2d 640, 645; Yick Sung v. Herman (1906) 2 Cal.App. 633, 635, italics added ["A sale is a contract by which, for a consideration, one transfers to another property or an interest therein "].) " 'Tangible personal property' means personal property which may be seen, weighed, measured, felt, or touched, or which is in any other manner perceptible to the senses." (§ 6016.)

 "Because these provisions apply only to tangible personal property, intangible personal property is not subject to sales tax." (Preston, supra, 25 Cal.4th at p. 208.) Although there is no statutory definition of intangible property, "such property is generally defined as property that is a 'right' rather than a physical object." (Navistar Internat. Transportation Corp. v. State Bd. of Equalization (Navistar ) (1994) 8 Cal.4th 868, 875 .) "Thus, for purposes of the law of taxation, intangible property is defined as including personal property that is not itself intrinsically valuable, but that derives its value from what it represents or evidences." (Ibid., italics added.) "Despite these definitions, distinguishing between tangible and intangible personal property for taxation purposes has proven troublesome. Much of the problem stems from the fact that the value of a tangible object often depends on the 'intangible rights and privileges' associated with the object." (Preston, supra, 25 Cal.4th at pp. 208‑209, italics added, citation omitted.)

 Since 1965, pursuant to its Annotation 540.0300, the Board has maintained that "[s]ales of shares pursuant to syndication of a horse pass[ ] an undivided ownership interest in the horse to the buyer. Such sales are sales of tangible personal property and subject to sales tax. 11/12/65." (More generally, under Annotation 540.0280, "[w]hen tenants in common transfer an interest in tangible personal property to another party, a sale of tangible personal property results, taxable measured by the price paid for the interest purchased. 9/16/66.")

 "For more than 40 years, the ... Board ... has made available for publication as the Business Taxes Law Guide summaries of opinions by its attorneys of the business tax effects of a wide range of transactions. Known as 'annotations,' the summaries are prompted by actual requests for legal opinions by the Board, its field auditors, and businesses subject to statutes within its jurisdiction. The annotations are brief statements‑‑often only a sentence or two‑‑purporting to state definitively the tax consequences of specific hypothetical business transactions. More extensive analyses, called 'backups,' are available to those who request them." (Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 4‑5, fn. omitted.) While "not controlling upon the courts by reason of their authority," the Board's annotations "do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." (Id. at p. 14.)

 B. Terms of the Syndication Agreement.

 In the syndication agreement, Agnew ("doing business as 'T90 Ranch' ") and Sahadi ("doing business as 'Cardiff Stud Farms' ") were both identified as Desert Wine's "owners" and also as "Seller [s ]." The agreement contained the following initial recitals: "Seller desires to sell and Purchasers desire to purchase fractional interests ... relative to the Horse [Desert Wine], which [f ]rational [i ]nterests shall be transferred to and vest in Purchasers, so that thereafter the owners of all such fractional interests (including the Seller with respect to any [f]ractional [i]nterests not sold) shall become the owners of the Horse," and "the parties hereto desire to set forth in this Agreement such terms and conditions of said ownership as they feel are necessary." (Italics added.)

 "ARTICLE I[, [¶]] CREATION OF THE SYNDICATE [, [¶]] 1.1 Ownership of the Horse. As of the date of this Agreement the ownership of the Horse is represented by ... 40 [ ] [f ]ractional [i ]nterests ( ... 30[ ] being owned by Agnew and Sahadi as tenants in common, ... 5[ ] being initially owned by Agnew and ... 5[ ] being initially owned by Sahadi). The ownership of the [f]ractional [i]nterests sold by Seller, or either of them, ... shall be transferred to and shall vest in the Purchasers. ...

 "1.2 Sale of Fractional Interests. Seller will execute and deliver to each Purchaser a bill of sale and security agreement in substantially the form attached hereto.... [¶¶] The obligation of the Purchasers shall further be evidenced [in addition to the execution of a promissory note] by a Financing Statement suitable for filing in substantially the form attached [a Form UCC‑1 presented for filing pursuant to the California Uniform Commercial Code]....

 "1.3 Membership in Syndicate. Each of the Purchasers, in addition to Seller, shall become a member of the DESERT WINE SYNDICATE upon acquiring a [f]ractional [i]nterest in the Horse (hereinafter 'Members' where applicable). The use of the term Syndicate to refer to the aggregate of persons owning the Horse as tenants in common under this Agreement is solely for convenience, and is not intended to, and shall not be deemed to, imply that such Syndicate constitutes a partnership or other legal entity.

 "1.4 Relationship of Members to Each Other. The relationship of the Members among themselves shall be that of tenants in common of a chattel (the Horse).

 "1.5 Delivery of the Horse to the Syndicate Manager. As of the date of this Agreement, the Manager for Racing Purposes shall commence his duties, which duties shall be performed until the Manager for Racing Purposes shall determine that the Horse should be retired from racing, which shall occur no later than January 7, 1985, upon which occurrence the Horse shall be delivered forthwith to the Syndicate Manager." (Italics added.)

 "ARTICLE III[, [¶]] USE OF THE HORSE [, [¶]] 3.1 Use of the Horse for Racing and Manager for Racing Purposes. It is contemplated that the Horse will be raced, so long as he is sound, throughout the 1984 racing season, but in no event later than January 7, 1985. Toward that end, Agnew shall control the Horse's racing career, and shall be designated as the Manager for Racing Purposes.... [¶¶] All racing profits or losses, including Breeders' Cup series purses earned by the Horse, shall be allocated between the owners of [f]ractional [i]nterests in the proportion of their respective number of [f]ractional [i]nterests to ... 40[ ][f]ractional [i]nterests.... Any trophies and other non‑monetary awards won shall become the sole property of T90 Ranch and Cardiff Stud Farms [Agnew's and Sahadi's ranches, respectively]. The Horse shall race in the silks and name of the Manager for Racing Purposes, to the extent permitted by law, or in such other capacity as is required by law.

 "3.2 Use of the Horse Thereafter. During its active breeding life, the Horse shall stand at stud at Cardiff Stud Farms in Solvang, California, or at such other location in California as Cardiff Stud Farms might relocate, or at the discretion of the Syndicate Manager at an established Thoroughbred Breeding Farm ... until such time as Cardiff Stud Farms resigns or is removed or is replaced pursuant to the terms of this Agreement. The Horse shall be used in connection with the breeding of Thoroughbred mares and for no inconsistent use or purpose.

 "3.3 Nominations. Each owner of a[f]ractional [i]nterest shall be entitled to one ... free nomination to the Horse in each breeding season, starting with the 1985 breeding season, for each [f]ractional [i]nterest owned. For the purpose of this Agreement, a 'nomination' is the right to breed one ... mare to the Horse in each annual breeding season."

 "4.1 Selection and Removal of Managers.

 "(a) The Syndicate Manager and the Manager for Racing Purposes shall continue until either shall resign or be removed as hereinafter provided.

 "(b) A Manager may be removed, with or without cause, only by the affirmative vote of more than [77.5] percent ... of the [f]ractional [i]nterests...."

 Article IV also required each syndicate member to pay his pro rata share of Desert Wine's board, keep and maintenance, including nomination expenses for the Breeder's Cup.

 Under Article V (Rights and Obligations of Syndicate Members), there was further discussion of the members' rights to nominate a mare and to hold meetings and to vote on questions submitted. In addition, Paragraph 5.3 provided as follows: "The Members hereby waive whatever right they may have to demand the partition, or sale for partition, of the Horse, and they do hereby agree that the sole means by which a Member may divest himself of his interest in the Horse shall be the transfer of the [f]ractional [i]nterest which he owns therein...."

 "ARTICLE VIII[, [¶]] TERMINATION OR MODIFICATION OF AGREEMENT AND SALE OF HORSE [, [¶]] This Agreement and the Syndicate created hereunder may be terminated, cancelled, altered, amended, or modified in any manner or respect with the affirmative vote of the holders of more than [77.5] percent ... of the [f]ractional [i]nterests; provided, however, that no such action shall affect any then existing obligation of any such holder to the Seller. It is further agreed that the Horse and all [f]ractional [i]nterests will be sold upon the affirmative vote of the holders of more than [77.5 ] percent ... of the [f ]ractional [i ]nterests, at a price and terms designated by such holders so voting affirmatively, subject to the terms of the ... bill of sale and security agreement...." (Italics added.)

 C. Agnew (and Sahadi) Transferred Title to a Horse, Tangible Personal Property.

 The imposition of a sales tax depends upon whether "[a]ny transfer of title or possession" and thus a "sale" of Desert Wine has taken place. (§ 6006.) Agnew does not argue that a horse is not tangible personal property; he claims, however, that "shareholders" or "investors did not acquire title to or possession of a horse." Instead, he says, "syndicate share[holder]s acquired two [intangible] contractual rights: (1) the immediate right to share in Desert Wine's racing profits or losses during his final three races; and (2) the future right, after Desert Wine's retirement from racing, to nominate, without charge, a mare for breeding one time each year for the remainder of the horse's breeding life, as long as the syndicate owned the stallion." (Emphasis added.)

 With respect to the "breeding shares," he notes that Annotation 540.0600 provides as follows: "The sale of the right to have a thoroughbred mare bred to a particular stallion once each year during the breeding season without charge is not the sale of tangible personal property and is thus not subject to tax. 11/2/62."  [FN3] The "racing shares," he says (citing California and non‑ California securities cases), are "intangible securities known as 'investment contracts.' "

FN3. He further notes that Annotation 330.2860 provides: "Stud fees are exempt from tax as rental receipts because the owner of the female (the putative lessee) acquires no possession, custody or control over the male by the simple fact that the male and female are confined together and left to their own devices. The transaction, therefore, is not a 'lease' subject to tax on the 'rental' (stud fees). 7/9/69." 

 As Agnew (perhaps inadvertently) concedes in the quotation from his opening brief set forth above, under the transaction as structured, there was in fact a transfer of ownership of Desert Wine‑‑from Agnew and Sahadi to the Desert Wine Syndicate, a term Agnew and Sahadi used to refer to the various "owners " of Desert Wine, a group Agnew and Sahadi collectively described as the "Desert Wine Syndicate," by virtue of their purchase of one or more "fractional interests" in the horse itself‑‑and not merely the transfer of intangible rights Agnew urges. "If there is a transfer of ownership the transaction is a sale." (Cal‑Metal, supra, 161 Cal.App.3d at p. 765, italics added, citation omitted.)

 As we observed in Cedars‑Sinai Medical Center v. State Bd. of Equalization  (Cedars‑Sinai ) (1984) 162 Cal.App.3d 1182, 1187, " '[I]n sales and use tax matters the language utilized by the parties to characterize their transactions does not, in itself, necessarily control.' [Citation.] 'In the interpretation of contracts, the paramount consideration is the intention of the contracting parties as it existed at the time of contracting.' [Citation.]. The court must examine an instrument in the light of the circumstances surrounding its execution so as to ascertain what the parties meant by the words they used." The "incidence of taxation depends upon the substance of a transaction...." (Northrop Corp. v. State Bd. of Equalization (Northrop ) (1980) 110 Cal.App.3d 132, 139, citing Comm'r v. Court Holding Co. (1945) 324 U.S. 331, 334.)

 Under the express terms of the agreement, "ownership of the Horse [Desert Wine] [was initially] represented by ... 40[ ][f]ractional [i]nterests.... The ownership of the [f]ractional [i]nterests sold by Seller, or either of them, ... shall be transferred to and shall vest in the Purchasers " "so that thereafter the owners of all such[f]ractional [i]nterests (including the Seller with respect to any [f]ractional [i]nterests not sold) shall become the owners of the Horse.... " (Italics added.)

 Each purchaser of a fractional interest became a member of the Desert Wine Syndicate, but "[t]he relationship of the Members among themselves shall be that of tenants in common of a chattel (the Horse)," and "[t]he use of the term Syndicate to refer to the aggregate of persons owning the Horse as tenants in common under this Agreement is solely for convenience, and is not intended to, and shall not be deemed to, imply that such Syndicate constitutes a partnership or other legal entity."

 Further, in connection with their purchase of a fractional interest  (representing ownership of Desert Wine), purchasers executed a bill of sale (which incorporated by reference the Desert Wine Syndicate Agreement), promissory note and UCC‑1 financing statement. A "bill of sale" is defined as "[a]n instrument for the conveyance of title to personal property, absolutely or by way of security. Cf. DEED" (Black's Law Dict. (7th ed.1999) p. 161, col. 1, italics added), or "a formal instrument for the conveyance or transfer of title to goods and chattels."  [FN4] (Merriam‑Webster's Collegiate Dict. (10th ed.1999) p. 113, col. 2, italics added.)

FN4. According to Black's Law Dictionary, "chattel" means "[m]ovable or transferable property; esp., personal property." By way of explanation, money is not considered chattel because it is "not of it self valuable" but a "horse " is. (Black's Law Dict., supra, p. 229, col. 2, italics added.) According to Webster's definition, "chattel" means "an item of tangible movable or immovable property except real estate, freehold, and things (as buildings) connected with real property." (Merriam‑Webster's Collegiate Dict., supra, p. 194, col. 1, italics added.)

 The fact that Desert Wine's owners (the syndicate members) agreed collectively that Agnew would control the horse's racing career and Sahadi, in turn, would control its breeding career (or that they accepted any other conditions under the syndication agreement) does not undermine the conclusion that title to Desert Wine was transferred. (See Dills v. Delira Corp. (1956) 145 Cal.App.2d 124, 132 [when persons jointly associated agree that management of the enterprise be entrusted to one of the group, "the making of the agreement to relinquish control is itself an exercise of the requisite right to control "].) Indeed, Agnew's argument is not unlike the argument we rejected in Cal‑Metal, supra, 161 Cal.App .3d 759, in which a taxpayer corporation entered into a partnership with another entity and transferred property to that partnership. The taxpayer corporation argued there was no absolute transfer of ownership because as a cogeneral partner in the new partnership, it had retained a say in the use of the equipment. (Id. at p. 765.)

 "[T]he parties are, of course, free to set up their transaction, if bona fide, so as not to be within the taxing statute." (Northrop, supra, 110 Cal.App.3d at p. 139.) As we said in Cal‑Metal, however, "[t]he taxpayer having chosen to conduct its business under a particular arrangement cannot disregard such an arrangement when it would be to the taxpayer's advantage." (Cal‑Metal, supra, 161 Cal.App.3d at p. 766.) In Cal‑Metal, "[t]he seller ... disposed of its equipment. It transferred the property outright. Another entity, the partnership[,] took title in the property. The fact the [taxpayer corporation] was a copartner does not alter this basic reality." (Id. at fn. 4.) Similarly, Agnew and Sahadi as owners of Desert Wine transferred their ownership interest to the Desert Wine syndicate members, a group which included but was not limited to Agnew and Sahadi. It was this group of owners who took title to Desert Wine. (And see § 6005 [a "syndicate" or "any other group or combination acting as a unit" is considered a "person" for purposes of the sales and use tax law].) The fact that Agnew and Sahadi served as racing manager and syndicate or breeding manager (respectively) within the newly‑ formed syndicate does not alter this basic reality.

 Under the Agreement, Agnew and Sahadi agreed to refund any payments made if Desert Wine died within the first year of the syndication, but thereafter, the purchaser was required to insure his interest in Desert Wine at least to the extent of the unpaid balance on the note in Agnew's and Sahadi's favor. Under the Uniform Commercial Code approach, risk of loss is one factor to be considered in determining whether a sale has taken place. (Cedars‑Sinai, supra, 162 Cal.App.3d at p. 1188.) However, the " 'contract must be construed as a whole; detached words or clauses standing alone are not controlling on the question of interpretation, each being viewed in relation to the agreement as an entity.' " (Ibid., citations omitted.)

 Here, in addition to the numerous recitations regarding "ownership" of Desert Wine, at the conclusion of Desert Wine's racing career in 1984, Agnew and Sahadi amended the Jockey Club Certificate of Registration to identify the "Desert Wine Syndicate" as Desert Wine's "new owner" (as Agnew necessarily concedes in light of the documentary evidence), and "title ... pass[ed] to the 'Desert Wine Syndicate.' "  [FN5] From the outset, each owner was responsible for his or her share of Desert Wine's board, maintenance and keep. Further, upon syndication, Agnew and Sahadi could no longer sell Desert Wine; instead, a vote of 77.5 percent of the syndicate members was required, and these syndicate members would determine the price and terms of sale suggesting that the sale would be for their benefit. Of particular significance, although he later attempted to qualify this response, Agnew testified at trial that the reason for syndicating Desert Wine was so that "a number of people [could] come together for [the] purpose of owning a horse ...."  [FN6]

FN5. Consistent with the agreement's provision that Desert Wine would race in Agnew's silks and name and that trophies and non‑monetary awards would go to T90 Ranch and Cardiff Stud Farms, the Jockey Club Certificate of Registration initially reflected ownership by "T90 Ranch and Cardiff Stud Farms."

FN6. He later said that what he had meant was that the interest would be an interest "similar to what you do with [a] limited partnership in real estate."

 In light of the foregoing discussion, it is unnecessary to discuss the securities cases on which Agnew relies in asserting that he transferred intangible rather than tangible property. These cases make no mention of the tax implications of any of the transactions at issue. "Like many tax statutes, the sales tax law employs relatively artificial, relatively self‑contained, concepts. If it utilizes popular meaning or concepts from other fields of law, it does so only by force of its own objectives and definitions.... Its definition of tangible personal property deals with tangibility.... To pursue the will‑o'‑the‑wisp of definitions, concepts and distinctions from other areas of law‑‑where they are shaped by purposes and by social and economic factors unrelated to sales taxation‑‑leads to false goals. The coverage of the sales tax law is shaped by its own provisions and definitions and, where these are unclear, by applying its own perceived policies and concepts. [Citation.]" (C.R. Federick, Inc. v. State Bd. of Equalization (1988) 204 Cal.App.3d 252, 262, italics added; King v. State Bd. of Equalization (1972) 22 Cal.App.3d 1006, 1010‑1011, footnote omitted.)

 State and federal securities laws seek to protect investors (Reves v. Ernst & Young (1990) 494 U.S. 56, 60; Ernst & Ernst v. Hochfelder (1976) 425 U.S. 185, 195; People v. Simon (1995) 9 Cal.4th 493, 502, fn. 8; Southern Cal. First Nat. Bank v. Quincy Cass Associates (1970) 3 Cal.3d 667, 675); consequently, the term "security" is liberally construed to advance that purpose. (Reves v. Ernst & Young, supra, 494 U.S. at p. 60‑61; Silver Hills Country Club v. Sobieski (1961) 55 Cal.2d 811, 814; People v. Graham (1985) 163 Cal.App.3d 1159, 1164.) In contrast to these legislative objectives, the purpose of the sales and use tax laws is to ensure that " 'all tangible personalty sold or utilized in California is taxed once for the support of the state government.' [Citations.]" (Woosley v. State of California (1992) 3 Cal.4th 758, 771.) The "reason for distinguishing between tangible and intangible property for the purpose of taxation is very evident. The first is visible, accessible and easy to identify and levy upon, while the other is not so readily located or its value ascertained. There is no room for logical controversy over the right to distinguish between tangible and intangible property for the purpose of taxation." (Roth Drug, Inc. v. Johnson (1936) 13 Cal.App.2d 720, 734.)

 Within this context, the Board determined nearly 40 years ago that because sales of shares pursuant to syndication of a horse pass an undivided ownership interest in the horse to the buyer, they constitute sales of tangible personal property subject to sales tax. (Annotation 540.0300.) In the annotations published in the Business Taxes Law Guide, "the Board and its staff have accumulated a substantial 'body of experience and informed judgment' in the administration of the business tax law 'to which the courts and litigants may properly resort for guidance.' " (Yamaha, supra, 19 Cal.4th at p. 14.) "The deference due an agency interpretation‑‑including the Board's annotations at issue here‑‑turns on a legally informed, commonsense assessment of their contextual merit. 'The weight of such a judgment in a particular case ... will depend upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.' " (Id. at pp. 14‑15, citation omitted.)

 While annotations are, by definition, "brief statements‑‑often only a sentence or two"‑‑as acknowledged by the Yamaha court, the validity of the reasoning reflected in Annotation 540.0300 is evidenced by its consistency with the authorities addressed above. If there is a transfer of ownership, the transaction is a sale. (Cal‑Metal, supra, 161 Cal.App.3d at p. 765.) Further, this annotation is consistent with a prior annotation specifying that the sale of the right to have a thoroughbred mare bred to a stallion is not the taxable sale of tangible personal property and a subsequent annotation providing that stud fees are exempt from tax as rental receipts inasmuch as there is no accompanying transfer of ownership in either of these instances. (Annotations 540.0600 and 330.22860.)

 Moreover, it is consistent with a more general subsequent annotation, Annotation 540.0280, which provides that when tenants in common transfer an interest in tangible personal property to another party, a sale of taxable personal property results. All of these pronouncements were in existence for at least 15 years before Agnew and Sahadi entered into the Desert Wine Syndication Agreement. Indeed, Agnew's attorney Craigo acknowledged at trial that, at the time he drafted the agreement, he understood the Board's position would be that the transaction was taxable, and he included a provision for sales and use tax in the first draft, but Agnew and Sahadi had him delete it.

 Under these circumstances, Agnew's attempt to carve out limited aspects of the Desert Wine transaction in order to distinguish it from Annotation 540.0300 and the reach of the sales tax law (§§ 6006, subd. (a); 6016; 6051) must fail. (Preston, supra, 25 Cal.4th at pp. 208‑209, italics added ["distinguishing between tangible and intangible personal property for taxation purposes has proven troublesome " because of "the fact that the value of a tangible object often depends on the 'intangible rights and privileges' associated with the object "].) The bottom line is that Agnew (and Sahadi) sold a horse, tangible personal property. Therefore, a "legally informed, commonsense assessment" of Annotation 540.0300's contextual merit reveals its conclusion that the sale of syndication shares as in the transaction at issue here to be persuasive, and Agnew was properly subjected to sales tax. (Yamaha, supra, 19 Cal.4th at pp. 14‑15.)

 II. The Desert Wine Transaction Was Not the Transfer of a Limited Partnership Interest.

 Similarly, Agnew's alternative argument that the "Desert Wine shares" were  "intangible partnership interests" (contrary to the language of the syndication agreement itself) is unavailing. Citing Annotation 395.0833 (and various general Corporations Code sections) as well as the syndication agreement's express provision that the syndicate will continue in place even if a fractional interest is sold or if the owner of a fractional interest dies or goes bankrupt, Agnew says "a sale of a partnership interest that does not destroy the venture's ongoing nature is not subject to a sales or use tax." Annotation 395.0833 provides: "Ordinarily, a sale of a partnership interest is not treated similarly to a sale of corporate stock. However, if the partnership agreement provides for the continued life of an ongoing partnership upon the withdrawal of a member ..., it is treated similarly to the sale of stock. This provision must be in writing in the partnership agreement. 5/9/90."

 Even if we were to assume that the Desert Wine Syndicate Agreement resulted in the creation of a partnership (notwithstanding the contrary language of the parties' agreement), Agnew's reliance upon Annotation 395.0833 is misplaced. In this case, we are not considering the tax consequences of a transfer of one of the fractional interests created under the agreement but rather the tax liability for Agnew's (and Sahadi's) initial transfer of their ownership of Desert Wine to the members of the Desert Wine Syndicate.

 Agnew does not attempt to explain how this annotation applies here, and there is nothing in the record to establish that what he transferred with the creation of the Desert Wine Syndicate was a partnership interest meeting the specifications of Annotation 395.0833. Indeed, although he argues that syndicate members "were not co‑owners of Desert Wine, but rather co‑owners of a right to share in the racing venture's profits," he does not contend (nor is there evidence to support the contention) that he was not a co‑owner of Desert Wine. Under Cal‑Metal, supra, 161 Cal.App.3d at page 766, because the syndicate took title not only to Agnew's (and Sahadi's) interest in Desert Wine's racing profits and losses but also to Desert Wine itself, the transfer at issue here is taxable.

 Elsewhere in his opening brief (in support of his claim that the transfer of a limited partnership interest in a horse is the transfer of a security, an intangible), Agnew also cites to Annotation 395.0835 which states: "Limited partnership interests are similar to shares of stock in a corporation. A limited partner has no interest in specific partnership property nor has the right to receive (partnership) property, other than money, unless otherwise specified in the partnership agreement. Accordingly, a transfer of a limited partnership interest in a horse is treated as a transfer of a security and not subject to sales or use tax. 12/10/86." (Emphasis added.) Again, because the record establishes that Agnew and Sahadi, Desert Wine's co‑owners, transferred their ownership of the horse (rather than a limited partnership interest in it) to the syndicate, this annotation does not support Agnew's contention (regardless of its application to the tax implications of a subsequent transfer of one of the fractional interests under the syndication agreement).

 Although the Desert Wine transaction could well have been cast in a form that would not have been subject to sales tax, the fact is that the arrangement we consider here effected a taxable sale of tangible personal property. "[T]ax consequences sometimes vary according to the forms of transactions that nonetheless accomplish substantially the same results." (Simplicity Pattern Co. v. State Bd. of Equalization (1980) 27 Cal.3d 900, 915, superseded by statute on another ground as stated in Preston, supra, 25 Cal.4th at p. 221, disapproved on another ground as stated in Navistar, supra, 8 Cal.4th at p. 877, fn. 4; see also Cal‑Metal, supra, 161 Cal.App.3d at p. 766 ["The taxpayer having chosen to conduct its business under a particular arrangement cannot disregard such an arrangement when it would be to the taxpayer's advantage"].) "Tax law necessarily is based upon what has been done, not what might have been done. The form of the transaction governs." (Navistar, supra, 8 Cal.4th at p. 878, fn. 5.)

 III. The "True Object" Test Does Not Relieve Agnew of Tax Liability.

 "When the transferred or sold assets involve not only tangible personal property, which is taxable, but also the performance of a service, which is not taxable, their classification is determined by the 'true object' test as set forth in title 18, California Code of Regulations, section 1501 (regulation 1501): 'The basic distinction in determining whether a particular transaction involves a sale of tangible personal property or the transfer of tangible personal property incidental to the performance of a service is one of the true objects of the contract; that is, is the real object sought by the buyer the service per se or the property produced by the service. If the true object of the contract is the service per se, the transaction is not subject to tax even though some tangible property is transferred.' " (Navistar, supra, 8 Cal.4th at p. 875.)

 Agnew says (without evidentiary support) that the winner of Desert Wine's last three races could expect to receive about $2 million so "[e]ven if Desert Wine won all three races against the best horses in the country, each shareholder stood to receive at most $50,000 (1/40th of $2 million), less costs and expenses." As such, they would recoup less than 20% of their $325,000 investment. Thus, the "true object" of the investment, he says, "lay in the acquisition of breeding shares.... Winning races was of value only to the extent it affected the future value of his breeding rights. If Desert Wine were to win his final three races, his value as a breeding stallion would increase dramatically, and the breeding rights, in tandem with ownership of the offspring of a winning stallion, would be of enormous value. In contrast, had Desert Wine been a gelding unable to reproduce, he could never have been sold for close to $325,000 per share." Because the "Board has acknowledged that [breeding shares] are not tangible personal property [as set forth in Annotation 540.0600], [t]o the extent personal property was transferred, the transfer was free of tax as incidental to a service, i.e., the right to have one designated mare serviced by Desert Wine each year."

 As our Supreme Court has emphasized: "Regulation 1501 suggests that a transfer of tangible personal property is not taxable if the transfer is incidental to the transfer of intangible property. [¶] We have, however, rejected such a broad interpretation. ..." Preston, supra, 25 Cal.4th at pp. 209‑210, italics added.) In making this determination, the court concluded that " 'a sale' does not become 'nontaxable whenever its principal purpose is to transfer the intangible content of the physical object being sold,' " and regulation 1501 does not apply where the " 'transfer was not incidental to any service.' " (Id. at p. 210.)

 Even if the Board has determined that the breeding shares alone are not tangible personal property, it does not follow that what was transferred in this case was a "service" within the meaning of regulation 1501. (Simplicity, supra, 27 Cal.3d at p. 909 ["by no means does [regulation 1501] support [the] broad theory that a sale becomes nontaxable whenever its principle purpose is to transfer the intangible content of the physical object being sold"] .) For purposes of the "true object" test, "service" has been defined by our Supreme Court as "the performance of labor for the benefit of another," (Navistar, supra, 8 Cal.4th at p. 875, citing Culligan Water Conditioning v. State Bd. of Equalization (Culligan ) (1976) 17 Cal.3d 86, 96), meaning human labor, as the focus is on the "services of the transferor. " (Simplicity, supra, 27 Cal.3d at p. 908, italics added.) In Simplicity, our Supreme Court explained regulation 1501 as follows: "Culligan, supra, 17 Cal.3d [at p.] 96, construed [regulation 1501] to require imposition of sales tax on the lease of water‑conditioning exchange units, on the ground that the true object was 'the furnishing of the exchange unit which, by itself and without requiring any performance of human labor, softens the water' and that the service of regenerating and installing the unit was incidental. [Certain leases of tangible personal property are taxable sales under section 6006, subdivision (g).] (Simplicity, supra, 27 Cal.3d at p. 908, fn. omitted.)

 "On the other hand, as an example of property transfers that are nontaxable because the property is incident to a service, regulation 1501 states that 'a firm which performs business advisory, record keeping, payroll and tax services for small businesses and furnishes forms, binders, and other property to its clients as an incident to the rendition of its services is the consumer and not the retailer of such tangible personal property. The true object of the contract between the firm and its client is the performance of a service [by the firm ] and not the furnishing of tangible personal property.' " (Simplicity, supra, 27 Cal.3d at p. 908.)

 As in Culligan, supra, 17 Cal.3d at page 96, italics added, while it is true that Sahadi was to provide certain services as the syndicate manager for breeding purposes, "realistically viewed the [syndicate member's] purpose in entering into the contract [was] to obtain, not personal services," but rather Desert Wine to breed with one of its mares. To paraphrase the Culligan court, the contention that the transferors (Agnew and Sahadi) were providing the service and that the transfer of Desert Wine was merely incidental to this service simply does not fit the facts. (Ibid.) Instead, the breeding was accomplished by Desert Wine itself and any services Sahadi performed as syndicate manager for breeding purposes were merely incidental to the function performed by Desert Wine. (Ibid.) Because the transfer at issue here was not incidental to any service of the transferor (Agnew), it was a taxable sale. (Simplicity, supra, 27 Cal.3d at p. 912.)

 MCI Airsignal, Inc. v. State Bd. of Equalization (1991) 1 Cal .App.4th 1527, on which Agnew primarily relies, is similarly distinguishable once the Desert Wine transaction is properly characterized. For the reasons explained in section I, ante, Agnew did not retain ownership of Desert Wine, and syndicate members were responsible for Desert Wine's upkeep. (Id. at p. 1532.) The "essence of the arrangement" between Agnew and Sahadi as sellers on the one hand and Desert Wine's buyers pursuant to the syndication agreement was not only the provision of breeding rights, but also ownership of the horse itself including the right to share in his racing earnings. (Ibid.) Finally and most notably, without Sahadi's services as syndicate manager, Desert Wine was not "useless." (Ibid.)

 Again, regardless of whether Agnew could have structured the transaction in a manner that would have rendered the sales nontaxable, the fact is that he not only transferred the right to annually breed a mare with Desert Wine but also transferred ownership in Desert Wine itself (along with rights to share in its racing profits), and the right to annually breed a mare with Desert Wine. The "form of the transaction governs." (Navistar, supra, 8 Cal.4th at p. 878, fn. 5.) "[T]ransfers of tangible property remain taxable even if these transfers are merely incidental to transfers of intangible property rights." (Preston, supra, 25 Cal.4th at p. 211.) Consequently, the transaction as structured is subject to sales tax.

 IV. Agnew Does Not Qualify for the Occasional Sale Exemption.

 Gross receipts from the "occasional sales" of tangible personal property are exempt from sales and use tax. (§ 6367.) The definition of an "[o]ccasional sale" includes "[a] sale of property not held or used by a seller in the course of activities for which he ... is required to hold a seller's permit or permits or would be required to hold a seller's permit or permits if the activities were conducted in this state, provided that the sale is not one of a series of sales sufficient in number, scope, and character to constitute an activity for which he ... is required to hold a seller's permit or would be required to hold a seller's permit if the activity were conducted in this state." (§ 6006.5, subd. (a), italics added.)

 Regulation 1595(a)(4) further provides: "Series of Sales Requiring the Holding of a Seller's Permit. A person not otherwise engaged in an activity requiring the holding of a seller's permit may make a series of sales sufficient in number, scope and character to require the holding of a seller's permit. The sale in that series of sales, and subsequent sales, during any 12 month period which resulted in the requirement to hold a permit are subject to tax, unless otherwise exempt.

 "(A) Number.

 
"1. Generally the minimum number of sales to require the holding of a seller's permit by a person not otherwise engaged in a selling activity is three within any 12 month period.
 
"2. When calculating the minimum number of sales which requires a person to hold a seller's permit, [designated types of sales inapplicable here] are excluded....

 "(B) Scope. The extent of the sales measured by their frequency or dollar volume.

 "(C) Character. This relates to the similarity in type and value giving effect to the taxpayer's operations...."

 Citing Ontario Community Foundations, Inc. v. State Bd. of Equalization  (1984) 35 Cal.3d 811, Agnew says he made an "isolated 'occasional sale' exempt from taxation" because he only sold "a single horse to a single entity, the 'Desert Wine Syndicate .' " We disagree.

 We preliminarily note that, because section 6367 is an exemption statute, it is "subject to the rule that exemptions from taxation are to be strictly construed against the taxpayer," (Santa Fe Transp. v. State Board of Equal. (1959) 51 Cal.2d 531, 539, italics added; Pacific Southwest Airlines v. State Bd. of Equalization (1977) 73 Cal.App.3d 32, 35), and "must be construed liberally in favor of the taxing authority." (Standard Oil Co. v. State Bd. of Equalization (1974) 39 Cal.App.3d 765, 769.) "[A]ny doubt [must] be resolved against the right to the exemption." (Ibid.)

 As discussed in section I, ante, the "broad[ ]" definition of sale,  (Cal‑Metal, supra, 161 Cal.App.3d at p. 764), includes the transfer of "property or an interest therein" to another for consideration. (Yick Sung v. Herman, supra, 2 Cal.App. at p. 635, italics added.) Consistent with this broad definition, Annotation 540.0280 states that when tenants in common transfer "an interest in tangible personal property to another party, a sale of tangible personal property results," and, more particularly, Annotation 540.0300 specifies that "[s]ales of shares pursuant to syndication of a horse pass[ ] an undivided ownership interest in the horse. Such sales are sales of tangible personal property ...." (Italics added.)

 Agnew says "[i]f one widget is sold to a partnership composed of 40 people, that is nonetheless a single transaction and a single sale." Agnew did not sell Desert Wine to a partnership; he (and Sahadi) sold 26.5 fractional interests in Desert Wine to as many purchasers, described collectively as the Desert Wine Syndicate. Accordingly, under the transaction as structured, Agnew did not make a single sale, but instead made more than three sales within a 12‑ month period. (Cf. Ontario Community Foundations, Inc. v. State Bd. of Equalization, supra, 35 Cal.3d at p. 815, italics added ["single sale by ... hospital of its equipment and furnishings, in connection with the sale of its entire business and the real property upon which it was located [was not] 'one of a series' of such sales which independently might require a permit under the statute"].) " 'The occasional [sale] exemption is not available if the sale in question was one of a series of sales sufficient in number ... scope and character to require the holding of a seller's permit.' " (Id. at pp. 820‑ 821 ["Taxability of a sale" "as 'one of a series of sales sufficient in number, scope and character to constitute an activity requiring the holding of a seller's permit' " "is a foregone conclusion under section 6006.5"].) The "form of the transaction governs." (Navistar, supra, 8 Cal.4th at p. 878, fn. 5.)

 V. Agnew Was Improperly Taxed on Sahadi's Receipts.

 The trial court determined that Agnew was liable for the "entire amount of the tax" because "a retailer is liable for sales tax on all of his gross receipts" under section 6051. As Agnew notes, for more than 50 years, Annotation 395.0760 has provided that a "[s]ale of tangible personal property by [a] co‑ owner of his interest therein is taxable measured by the consideration received for his interest." Significantly, the Board has not even responded to this contention, and we conclude that, under the Board's own directive, Agnew should have been taxed on the consideration he received.

 VI. The Board May Not Retain a Sales Tax in Lieu of a Use Tax that Was Never Assessed.

 Agnew contends and the Board does not dispute that 11 syndicate shares were purchased while Desert Wine was in Washington. Accordingly, he says, a sales tax was not properly imposed; the only tax properly imposed on the out of state purchases would have been a use tax. [FN8] In response to Agnew's requests for admissions, the Board admitted that "[n]o use tax ever has been assessed or determined by the [Board] to be owing by any person as a result of the purchase of a syndicate share of Desert Wine in 1984."

FN8. As stated in the Board's notes, "If at the time of sale[,] the horse is located in this state[,] the sale is subject to SALES tax. If at the time of the [sale] of the share[,] the horse is located outside this state[,] the sales tax does not apply but later events make the USE tax apply." (Italics added.)

 A use tax is payable when tangible personal property is purchased out of state with the intent to bring it into California. (Agnew v. State Bd. of Equalization, supra, 21 Cal.4th at p. 315, fn. 3; § 6201.) "The sales and use taxes 'are mutually exclusive but complementary, and are designed to exact an equal tax based on a percentage of the purchase price of the property in question' ..., but the sales tax is levied on freedom to purchase while the use tax is on the enjoyment of the item purchased." (Agnew v. State Bd. of Equalization, supra, 21 Cal.4th at p. 315, fn. 3, citations omitted; and see McLeod v. Dilworth Co. (1944) 322 U.S. 327, 330, italics added ["A sales tax and a use tax ... are different in conception, [and] are assessments upon different transactions ...."].)

 The use tax is a tax on the storage, use or consumption of tangible personal property in this State where a sales tax would not be imposed; a "retailer engaged in business in this state and making sales of tangible personal property for storage, use, or other consumption in this state" must collect the use tax from the purchaser. (Agnew v. State Bd. of Equalization, supra, 21 Cal.4th at p. 315, fn. 3.; §§ 6203, 6204.) Primary liability for the use tax falls on the purchaser, and the California retailer is merely a collection agent for the use tax. (Brandtjen & Kluge v. Fincher (1941) 44 Cal.App.2d Supp. 939, 942‑943.) To begin with, "Tax laws are to be strictly construed in favor of the taxpayer[, and t]his is especially true where the statute seeks to impose the tax liability of one person on another in order to facilitate its collection." (Knudsen Dairy Products Co. v. State Bd. of Equalization (1970) 12 Cal.App.3d 47, 52‑53, italics added, citation omitted.)

 Section 6511 specifies: "If any person fails to make a return, the board shall make an estimate of the amount of the gross receipts of the person, or, as the case may be, of the amount of the total sales price of tangible personal property sold or purchased by the person, the storage, use, or other consumption of which in this state is subject to the use tax. The estimate shall be made for the period or periods in respect to which the person failed to make a return and shall be based upon any information which is in the board's possession or may come into its possession. Upon the basis of this estimate the board shall compute and determine the amount of tax or other amount required to be paid to the state, adding to the sum arrived at a penalty equal to 10 percent thereof. One or more determinations may be made for one or for more than one period. ..." (Italics added.)

 In the case of a failure to file a return, "every notice of determination shall be mailed within eight years after the last day of the calendar month following the one‑year period for which the amount is proposed to be determined." (§ 6487, subd. (b).) In light of the Board's admission that it has never assessed or determined a use tax to be owing by anyone as a result of the Desert Wine syndication, its apparent concession that a use tax and not a sales tax would be the applicable tax and section 6511's requirements for notice, we agree with Agnew that he is entitled to a refund of the tax paid on the 11 shares sold while Desert Wine was out of state.

 VII. The Board Is Not Estopped to Collect Interest Because of the Delay Between the Sahadi Audit and Agnew's Notice of Determination, But It Improperly Retained Agnew's Interest Payment Pending Resolution of his Claim for Refund.

 A. Laches and Estoppel.

 Agnew says the Board became aware of his involvement in the Desert Wine syndication during the Sahadi audit in 1987 but waited until April 1992 to issue a determination against him, resulting in the ultimate accrual of interest exceeding the tax itself. As such, he says, he is entitled to a refund of the interest that accrued because of the Board's delay under principles of laches and estoppel.

 Agnew cites City and County of San Francisco v. Pacello (1978) 85 Cal.App.3d 637, 645, and Brown v. State Personnel Bd. (1985) 166 Cal.App.3d 1151, 1159, in support of his claim that laches should bar the Board's collection of interest. Leaving to one side the fact that the trial court concluded that there had been "no undue delay" in light of the limited documentation Sahadi provided to the Board and the evidence presented, Agnew cites no authority, however, for the doctrine's application in a tax case, and, as the court in City and County of San Francisco v. Pacello, supra, 85 Cal.App.3d at page 645, noted: "Laches ... requires only delay plus resulting prejudice." "[E]stoppel is a separate doctrine, with significantly more rigorous requirements." (Ibid.) As our Supreme Court in U.S. Fid. & Guar. Co. v. State Bd. of Equal. (1956) 47 Cal.2d 384, 389, cautioned: "[I]t is the unusual case in which estoppel will be applied in tax cases; the case must be clear and the injustice great.... 'The power of taxation shall never be surrendered or suspended by any grant or contract to which the State shall be a party.' (Cal. Const., art. XIII, § 6.)"

 Even when the taxpayer has been erroneously advised by an administrative ruling that he is exempt from tax, estoppel does not prevent the collection of a tax. (Fischbach & Moore, Inc. v. State Bd. of Equalization (1981) 117 Cal.App.3d 627, 632; U.S. Fid. & Guar. Co. v. State Bd. of Equal., supra, 47 Cal.2d at pp. 390‑391; La Societe Francaise v. Cal. Emp. Com. (1943) 56 Cal.App.2d 534, 554 ["The taxpayer is deemed to act with knowledge that administrative officials cannot bind the government by their erroneous interpretation of tax statutes. Even where the government has made a refund to the taxpayer on an interpretive ruling that no tax is due it is held that it may subsequently recover the amount erroneously refunded"].)

 Under these cases, a "general rule" has emerged, however, that "a taxpayer is not required at [his] peril to know that a state's administrative rulings are erroneous. Although the taxpayer's liability for the original tax remains, [his] liability for penalties and interest may be excused [where he has ] acted in reliance on a specific declaration by the board that no tax would be payable." (Fischbach & Moore, Inc. v. State Bd. of Equalization, supra, 117 Cal.App.3d at p. 633, italics added; see also La Societe Francaise v. Cal. Emp. Com., supra, 56 Cal.App.2d at p. 555, italics added ["It is our view that ... a proper regard for the protection of the interests of the government in its revenues, with recognition also of a degree of responsibility on the part of the government to a taxpayer who has relied to his prejudice on an official ruling, is achieved by requiring the taxpayer to discharge that part of the tax burden which it was contemplated [he] should bear by the statute imposing the tax, while relieving [him] from liability for the ... interest on delayed payments"].)

 Agnew fails to explain how this limited exception may be applied to him in light of the fact that the Board never issued an erroneous ruling on which he relied to his detriment. To the contrary, for the 20 years preceding Agnew's syndication of Desert Wine, the Board's existing annotations specified that the sales of shares pursuant to syndication of a horse pass an undivided ownership interest in the horse to a buyer and, as a result, such sales constituted sales of tangible personal property subject to sales tax. (Annotation 540.0300.) There is no indication that the Board ever advised Agnew otherwise. Moreover, at the time he drafted the syndication agreement, Craigo understood that the Board's position was that the sale of interests in Desert Wine under the agreement would be taxable, and the first draft of the syndication agreement included a provision regarding sales and use tax liability, but Sahadi and Agnew told Craigo to remove it.

 B. Interest Retained Pending Resolution of Agnew's Refund Claim.

 When Agnew filed his claim for refund, he did not initially pay the interest amount. However, while his challenge to the validity of the Board's policy requiring such payment was pending before our Supreme Court, the Board began to levy on his property, and he paid the interest amount in order to continue doing business. Once the decision in Agnew v. State Bd. of Equalization, supra, 21 Cal.4th 310 became final, however, the Board knew that the Supreme Court had found its policy to be invalid and that its retention of interest while Agnew pursued his refund claim was wrongful. It follows that Agnew should be restored to the position he would have been in had he not been forced to pay the interest as of the date the Supreme Court's decision became final.

 VIII. Agnew Has Failed to Demonstrate That He Was Prejudiced by the Trial Court's Improper Deference to the Board's Prior Administrative Decisions.

 In its statement of decision, the trial court found "that the ... Board ... correctly rejected Agnew's argument that a syndication of undivided interests in a horse for breeding and racing purposes is not a transaction in tangible personal property and that the sale of fractional interests in Desert Wine was not the sale of tax‑exempt partnership interests." (Italics added.) Later, the court stated: "[T]he material facts do not appear to be in dispute. Resolution of these matters largely involves questions of law, which is the province of the trial court, giving appropriate deference to prior administrative interpretations." (Italics added.)

 Omitting the court's statement that the matter primarily involved questions of law, "the province of the trial court," instead singling out the italicized language and citing Yamaha, supra, 19 Cal.4th 1, Agnew says the trial court's statements demonstrate that it "erroneously deferred to the Board's prior administrative decisions." A review of the statement of decision reveals Agnew's contention in this regard to be unfounded.

 As discussed in section I, ante, our Supreme Court explained in  Yamaha, supra, 19 Cal.4th at page 14, that the "deference due an agency interpretation‑‑including the Board's annotations at issue here‑‑turns on a legally informed, commonsense assessment of their contextual merit." While "not controlling upon the courts," such annotations "do constitute a body of experience and informed judgment to which courts and litigants may properly resort for guidance." (Ibid.) In Yamaha, the Court of Appeal had reversed a trial court's judgment, adopting an annotation "as dispositive." (Id. at p. 6, italics added.) Because the Court of Appeal had applied the incorrect standard of review and therefore prejudiced the taxpayer, the judgment was reversed and remanded for the Court of Appeal to consider the merits of the tax issue as well as the value of the Board's interpretation in light of the Yamaha decision. (Id. at p. 15.)

 Unlike the circumstances in Yamaha, the statement of decision in this case establishes that the trial court did not merely adopt any particular annotation or interpretation of the Board as dispositive, but rather independently evaluated the merits of the Board's interpretations as applicable and found them to be valid. Indeed, in making the statements of which Agnew complains, the trial court cited to Yamaha, supra, 19 Cal.4th at page 8, citations omitted, where the court stated: "Considered alone and apart from the context and circumstances that produce them, agency interpretations are not binding or necessarily even authoritative.... 'The standard for judicial review of agency interpretation of law is the independent judgment of the court, giving deference to the determination of the agency appropriate to the circumstances of the agency action.' " Thus, the trial court was mindful of the appropriate standard of review, and there is no indication that the trial court departed from the proper standard to Agnew's detriment.

 IX. The Trial Court Failed to Make Findings on Controverted Material Issues.

 Agnew requested a statement of decision, the Board prepared one and, notwithstanding Agnew's further submission of objections and request for findings on specified issues, the trial court signed the Board's proposed statement of decision without change. In this regard, Agnew cites to the trial court's failure to make findings on the following issues: (1) whether tangible personal property was transferred as incidental to a tax‑free service under the "true object" test; (2) whether the transaction constituted a tax exempt "occasional sale"; (3) whether the failure to assess a use tax precluded the Board from refusing to refund the sales tax paid on the purchase of 11 shares while Desert Wine was out of state; and (4) whether Agnew was entitled to a refund of that portion of the tax and interest attributable to (a) the sale of the first two shares for which a seller's permit was not required; (b) the single share sold in 1985; and (c) the half‑share sold for resale. Agnew brought each of these omissions to the trial court's attention.

 On the basis of the undisputed facts in the record, the parties' arguments on appeal and in the interest of judicial economy, we have already addressed Agnew's first three points. As to the fourth (including subpoints (a) through (c)), because the trial court did not address them, Agnew properly raised them in the trial court and the parties have not presented argument on these issues, we will remand these matters to the trial court for determination.

 X. Agnew Has Failed to Demonstrate Prejudice Resulting from the Trial Court's Exclusion of Evidence.

 At trial, Agnew made an offer of proof that he had prepared a proposed syndication agreement regarding another horse he owned (Star Recruit) identical in every respect to the Desert Wine agreement (except for the name, purchase price and dates) and submitted it to the California Department of Corporations (in 1992) and the United States Securities and Exchange Commission (in 1993), seeking these agencies' interpretation whether syndicate shares constitute "securities or investment contracts" under the California Corporate Securities Law of 1968 and the Securities Act of 1933 respectively.

 In its discretion, the Department of Corporations declined to render an opinion due to a reduction in personnel and because the issue could be answered "by reviewing applicable law, rules of the Commissioner of Corporations, and previous opinions and releases." Briefly, the Department noted that the proposed syndication would involve a sharing of profits and losses and that three of the Commissioner's prior opinions indicated that "a 'security' will be found under the 'investment contract theory' where there will be a pooling of income, or sharing of gains or losses." As such the proposed syndication would involve the offer and sale of a "security" as defined in section 25019 of the Corporations Code. (Italics added.)

 In its brief response, the SEC (through its Office of Chief Counsel, Division of Corporate Finance) advised that it was "unable to concur" that the syndicate shares were not " 'securities' within the meaning of Section 2(1) of the Securities Act of 1933. Accordingly, [it was] unable to advise ... that [it] would not recommend enforcement action ... in the event that the syndicate shares [were] offered or sold without compliance with the registration requirements of the Securities Act of 1933 or otherwise in reliance upon an appropriate exemption from such requirements.... [T]his response only represents the Division's position on enforcement action and does not purport to express any legal conclusion on the questions presented." (Italics added.) The SEC published Agnew's letter and its response.

 Because the Board would not have the opportunity to cross‑examine the parties who had made the agency determinations regarding the bases for their decisions, the trial court excluded this evidence. Agnew cited no authority to the trial court (other than the fact that the SEC had published its response) but now says the "interpretive opinions" were admissible as official records under Evidence Code section 1280. Leaving to one side the question of whether it was even error to exclude these documents, because the ownership interests in Desert Wine constitute tangible personal property under sales and use tax law, regardless of their characterization under securities law which is "shaped by purposes and by social and economic factors unrelated to sales taxation," (see section I, ante ), Agnew was not prejudiced by the exclusion. (C.R. Federick, Inc. v. State Bd. of Equalization, supra, 204 Cal.App.3d at p. 262; King v. State Bd. of Equalization, supra, 22 Cal.App.3d at pp. 1010‑1011.)

DISPOSITION

 The judgment is reversed in part and remanded for the trial court to do the following: (1) As the tax on Agnew must be measured by the consideration received for "his interest" (and not Sahadi's) under Annotation 395.0760, the tax should be recalculated to reflect only those shares for which Agnew was paid; (2) because the Board admittedly never noticed or assessed a use tax against Agnew, the taxable amount should not include the 11 shares sold while Desert Wine was out of state; (3) As the statement of decision did not address these issues despite Agnew's initial and subsequent requests, the trial court must decide the proper treatment of the sale of (a) the first two shares, (b) the single share sold in 1985, and (c) the half‑share sold for resale; (4) once the tax amount has been redetermined in light of this instructions, the interest amount must be recalculated accordingly; and (5) with respect to the interest amount, Agnew should be restored to the position he would have been in if the Board did not improperly retain his payment of interest pending resolution of his claim for refund after the Supreme Court's decision invalidating the Board's policy in this regard. In all other respects, the judgment is affirmed. Each side is to bear its own costs.


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