Retail sales of cold food products are generally exempt from sales tax, but the BOE has announced that ice is not food, so it is subject to sales tax.1 Although it's technically subject to use tax, we doubt many people transport ice from out of state and bring or ship it into California!
Bottled water is exempt from sales tax, but freeze it and you pay tax because ice is generally used to keep other items cold. Even though ice may be incidentally consumed by a person when ice is used in a beverage to keep the beverage cold, the primary purpose of the ice is to keep the beverage cold.
We could argue that it's just frozen bottled water, but the BOE won't warm up to the idea of changing their minds.
1 California SBE Tax Information Bulletin No. 388 (March 1, 2016)
After the February 21 Tribune article on IRS phone scams, a subscriber wrote in with a good question — why aren't any of these scofflaws getting caught? The answer is that they are, and here's an especially sensational case.
In 2013, a woman posted this statement on her Facebook page:
I'M RASHIA, THE QUEEN OF IRS TAX FRAUD.
"Rashia" is Rashia Wilson of Tampa, Florida, and she was ultimately sentenced to 21 years in prison for stealing around $3 million in fraudulent refunds. Note that she was convicted for stealing $3 million — the estimate of how much she and her co-conspirators actually stole is around $20 million.1
She and a couple of friends were e-filing fraudulent returns — they'd set up at a motel and use the motel's Wi-Fi to bulk file. Somehow Rashia had gained access to medical records, and they were using that information to file the fraudulent returns. When the feds caught on, their investigation took two years to complete … they called it "Operation Rainmaker" because Rashia was making it rain cash.
And what did Rashia do with her millions?2
With Rashia and friends in the clink, I know you're all itching to get your hands on the chrome-plated Camaro. Too late. It sold at auction to a gold broker in Detroit for $120,000.3 What better place for such a specimen than the Motor City?
1 http://heavy.com/news/2013/07/rashia-wilson-tax-fraud-cheat-florida-queen/
2 www.tampabay.com/news/courts/criminal/rashia-wilson-says-she-was-no-queen-just-a-woman-struggling-with-a-past/2221627
3 www.macombdaily.com/article/MD/20131001/NEWS/130939979
Here's a stumper for you … click below to reveal the answer.
You've decided to start your own company and travel throughout California giving seminars on Slow Roasted Cuisine for Tax Pros in the Pressure Cooker. You'll review the techniques of mastering beef bourguignon, simmering in a velvety French burgundy while chewing on repair regulations and the shared responsibility payment, all for six hours of CPE.* Unfortunately, the seminars are not going well. The feedback is that while the food is fairly tasty, no one can compete with Spidell on the breadth of their tax knowledge and their culinary talent. At the end of the year, you have a $100,000 federal NOL and you want to carry the loss back two years. Must you carry the loss back for California purposes as well?
*Culinary Personal Enjoyment
Answer:
You may make a separate California election. You will find the following in ¶21-308 (Net operating losses) of Spidell's Analysis & Explanation of California Taxes®:
"Like federal law, the taxpayer must carry the loss back first and then forward unless the taxpayer makes a valid election to relinquish/waive the entire carryback period and carry the loss forward. (IRC §170(b)(3)) You may make a separate California election. (R&TC §17024.5)"
Lynn Freer, EA, loves to travel and loves Starbucks. Here she is at Starbucks on the Champs-Élysées.
Kathryn Zdan, EA, is not only director of the editorial department, she also "rocks the house" as a regular in curling bonspiels around the country.
Diane Fuller is a gourmet cook with a refined taste in all things sweet. From traditional Japanese desserts to the best bacon donut that's ever appeared in our break room, Diane knows how to satisfy her sweet tooth. She also writes children's poetry!
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