Legal Definitions - isolated sale

An isolated sale refers to a single, infrequent transaction that is not part of a regular business activity or a series of similar commercial dealings. It is a one-off event, distinct from the ongoing operations of a business or a person regularly engaged in selling goods or services. This concept is often important in determining whether certain sales tax obligations or regulatory requirements apply, as isolated sales may sometimes be exempt from rules that apply to continuous commercial enterprises.

Here are some examples to illustrate the concept of an isolated sale:

• Example 1: Selling a Personal Item

  Imagine David decides to sell his personal bicycle, which he has owned for several years, to a friend. David is an accountant and does not regularly buy or sell bicycles or any other goods as part of a business.

  Explanation: This is an isolated sale because David is not engaged in the business of selling bicycles. It is a single transaction involving a personal asset, not part of a continuous commercial activity.

• Example 2: A Business Disposing of Surplus Equipment

  A software development company, whose primary business is creating applications, decides to replace its old server rack with a newer model. It sells the used server rack to another small business. The software company does not regularly sell computer hardware.

  Explanation: For the software development company, the sale of the server rack is an isolated sale. It is a one-time disposal of an asset that is not part of its core business operations or regular inventory sales.

• Example 3: A Non-Profit's Occasional Fundraiser

  A local community garden organization holds a single annual plant sale to raise funds for seeds and tools. While plants are sold, this event occurs only once a year, and the organization's main purpose is community gardening, not retail plant sales.

  Explanation: The sales made during the annual plant sale are considered isolated sales. Despite involving the exchange of goods for money, it is a sporadic fundraising event, not a continuous commercial enterprise by the community garden organization.