Items temporarily withdrawn from stock for demonstration purposes are not subject to tax at the time of withdrawal from stock. When such items are sold at retail, the tax applies.

1. (1) L, a lawn mower dealer, uses a mower from stock to mow the lawn around the establishment. L must pay use tax on the use of this mower. When the mower is later resold, L must collect and remit sales tax on the price of the mower.
2. (2) A customer wants to buy a lawn mower from L but wants to see several models. L demonstrates each mower by letting the customer mow the grass around L's establishment. The customer decides on the model and purchases it. Sales tax is due on the sale of that mower, but no tax is due on the use of the other mowers the customer tried out before purchasing the chosen mower.

Property withdrawn for purposes other than demonstration, such as for personal use or other commercial use, is subject to the use tax when withdrawn. If it is later sold at retail, it is subject to sales tax on the sale price without any deduction for the use tax paid.

Examples:

Source: SL 1975, ch 16, § 1; 11 SDR 1, effective July 19, 1984; 13 SDR 129, 13 SDR 134, effective July 1, 1987; 16 SDR 76, effective November 1, 1989; 21 SDR 219, effective July 1, 1995.

General Authority: SDCL 10-45-47.1 , 10-46-35.1.

Law Implemented: SDCL 10-45-2 , 10-46-2 , 10-46-4.