     The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.


                                                                  SUMMARY
                                                             January 2, 2020

                                 2020COA4

No. 18CA2165, Am. Multi-Cinema, Inc. v. City of Aurora —
Taxation — Municipalities — Sales and Use Tax

     A division of the court of appeals considers whether the City of

Aurora properly levied a use tax on American Multi-Cinema, Inc.’s

(AMC’s) master licensing agreements (MLAs) with motion picture

distributors. The division follows Cinemark USA, Inc. v. Seest, 190

P.3d 793 (Colo. App. 2008), applying its analysis to new technology.

Because (1) the true object of the MLAs is to obtain tangible

personal property (the data files), and (2) AMC’s exhibition of motion

pictures is not a resale exempt from the City’s use tax, the division

affirms the district court’s judgment upholding the City’s use tax

levied on the MLAs.
COLORADO COURT OF APPEALS                                           2020COA4


Court of Appeals No. 18CA2165
Arapahoe County District Court No. 14CV30822
Honorable Kurt A. Horton, Judge


American Multi-Cinema, Inc., as successor-in-interest to AMC Showplace
Theatres, Inc., d/b/a Arapahoe Crossing 16 and Southland Stadium 16,

Plaintiff-Appellant,

v.

City of Aurora,

Defendant-Appellee.


                            JUDGMENT AFFIRMED

                                 Division VII
                           Opinion by JUDGE FOX
                        Tow and Casebolt*, JJ., concur

                         Announced January 2, 2020


Holland & Hart LLP, Christina F. Gomez, Jonathan S. Bender, Kyriaki Council,
Denver, Colorado, for Plaintiff-Appellant

Kissinger & Fellman, P.C., Paul D. Godec, Denver, Colorado; Timothy Joyce,
Assistant City Attorney, Aurora, Colorado, for Defendant-Appellee

Bryan Cave Leighton Paisner LLP, Stephen D. Rynerson, Denver, Colorado;
Jacqueline E. Brenneman, North Hollywood, California, for Amicus Curiae
National Association of Theatre Owners

Michael J. Axelrad, Senior Assistant City Attorney, Greeley, Colorado, for
Amicus Curiae Colorado Municipal League, City of Fort Collins, City of
Littleton, City of Longmont, City of Montrose, and City of Westminster

Philip J. Weiser, Attorney General, Noah C. Patterson, Assistant Solicitor
General, Anne Mangiardi, Assistant Attorney General, Annie Lawson, Assistant
Attorney General, Denver, Colorado, for Amicus Curiae Colorado Department of
Revenue


*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1    Plaintiff, American Multi-Cinema, Inc. (AMC), appeals the

 district court’s judgment finding that defendant, City of Aurora,

 properly levied a use tax on AMC’s master licensing agreements

 (MLAs) with motion picture distributors. We affirm.

                           I.    Background

¶2    AMC generates revenue by exhibiting motion pictures and

 selling admission tickets to the public. AMC’s MLAs authorize it to

 exhibit motion pictures for a licensing fee, and AMC then pays

 distributors a percentage of its admission sales. AMC has paid the

 City a use tax — levied on tangible property used, stored,

 distributed, or consumed in the City — on its MLA fees since it

 began operation. AMC previously received motion pictures from

 distributors in the form of 35-millimeter film reels but later replaced

 the celluloid film technology with digital equipment and now

 receives motion pictures via digital files on portable hard drives.




                                    1
                          Portable Hard Drives

¶3    On November 1, 2012, AMC filed two refund claims with the

 City, seeking a $191,634.06 refund from use taxes paid on licensing

 fees from May 27, 2010, through September 27, 2012. During this

 timeframe, AMC used digital files to exhibit motion pictures at its

 two Aurora theatres. Arguing that the digital files were not tangible

 personal property in the district court — on appeal, AMC no longer

 disputes that the digital files are tangible personal property — AMC

 claimed that its MLA fees could no longer be subjected to the City’s

 use tax. The City denied AMC’s refund claims in full, and AMC

 appealed to the City’s Finance Director, who also rejected AMC’s

 claims.



                                   2
¶4        On March 26, 2014, AMC appealed to the district court. After

 a bench trial, the district court upheld the City’s use tax, finding

 that (1) the data files were tangible personal property under the

 City’s code; (2) the true object of the MLAs was to acquire the data

 files rather than to obtain the intangible right to exhibit; and (3) the

 MLAs were not exempt from the use tax as a purchase for resale.

 AMC appealed.

                                II.   Use Tax

¶5        AMC argues that the district court erred by concluding that (1)

 the “true object” of the MLAs was to obtain tangible personal

 property and (2) AMC was not exempt from the use tax because the

 MLAs were not a wholesale transaction. We disagree.

     A.   Preservation, Standard of Review, and Statutory Construction

¶6        The parties generally agree that AMC preserved its arguments

 for appeal. However, the City contends that AMC did not previously

 argue that its licensing agreements were exempt from the use tax as

 “an ingredient of a manufactured or compounded product, in the

 regular course of a business.” Aurora Mun. Code § 130-198(2).

 Because AMC argued that it was exempt from the use tax under

 section 130-198(2) before the district court, we consider its
                                      3
 argument sufficiently preserved for appeal. See Berra v. Springer &

 Steinberg, P.C., 251 P.3d 567, 570 (Colo. App. 2010) (“[T]o preserve

 the issue for appeal all that was needed was that the issue be

 brought to the attention of the trial court and that the court be

 given an opportunity to rule on it.”).

¶7    Pursuant to section 39-21-105(2)(b), C.R.S. 2019, a taxpayer

 may appeal its local government’s final taxing determination to the

 district court, and the district court shall try the case de novo. See

 also Noble Energy, Inc. v. Colo. Dep’t of Revenue, 232 P.3d 293, 295-

 96 (Colo. App. 2010). On appeal, we defer to the district court’s

 factual findings and disturb them only if they are clearly erroneous

 and lack any support in the record. Id. at 296. But, we review the

 district court’s application of the law and a governmental body’s

 interpretation of the law de novo. Treece, Alfrey, Musat & Bosworth,

 PC v. Dep’t of Fin., 298 P.3d 993, 996 (Colo. App. 2011); Noble

 Energy, Inc., 232 P.3d at 296.

¶8    To the extent our analysis requires application of the City’s tax

 laws, we construe a municipal code using the same rules that we

 use in interpreting statutes. Waste Mgmt. of Colo., Inc. v. City of


                                    4
 Commerce City, 250 P.3d 722, 725 (Colo. App. 2010). In construing

 legislation, we look first to the plain language, reading the statutory

 provision as a whole and in such a way as to give effect to every

 word. Id. We reject interpretations that will render words or

 phrases superfluous and avoid interpretations that produce illogical

 or absurd results. Id. When “the body enacting particular

 legislation has not expressly defined a term,” we give that term “its

 ordinary meaning.” City & Cty. of Denver v. Expedia, Inc., 2017 CO

 32, ¶ 18. If a tax code’s language is clear, we need not resort to

 other rules of statutory interpretation. Waste Mgmt. of Colo., Inc.,

 250 P.3d at 725.

¶9    We defer to the interpretation provided by the agency charged

 with the administration of the tax code unless that interpretation is

 inconsistent with the legislative intent. Id. But statutory provisions

 establishing and defining the scope of a tax “will not be extended

 beyond the clear import of the language used, nor will their

 operation be enlarged by analogy.” Noble Energy, Inc., 232 P.3d at

 296 (citation omitted). Thus, we resolve all doubts against the

 government and in favor of the taxpayer. Id.


                                    5
¶ 10   However, this principle is inapplicable when a taxpayer claims

  a statutory exemption from taxation. Id. In such cases the

  presumption is reversed, and the taxpayer has the burden of

  proving entitlement to the exemption claimed. Id.

                           B.    Applicable Law

¶ 11   The City levies a use tax on

             every person in the city . . . for the privilege of
             using, storing, distributing, or consuming in
             the city any tangible personal property . . . or
             taxable service purchased, leased or rented
             and not subjected to the city sales tax, without
             regard to whether the property is purchased
             from sources within or without the city.

  Aurora Mun. Code § 130-196(a). The City defines “use tax” as a tax

  paid “by a consumer for using, storing, distributing or otherwise

  consuming tangible personal property or taxable services inside the

  city.” Aurora Mun. Code § 130-31. The code defines “tangible

  personal property” as “personal property that can be one or more of

  the following: seen, weighed, measured, felt, touched, stored,

  transported, exchanged, or that is in any other manner perceptible

  to the senses.” Id. The stated intent of the City’s use tax is to

  ensure that “every person who stores, uses, distributes, or

  consumes in the city any tangible personal property or taxable
                                      6
  services purchased, leased or rented at retail” is taxed because they

  are “exercising a taxable privilege.” Aurora Mun. Code § 130-33(b).

¶ 12   The City’s tax code exempts from use tax the “storage, use or

  consumption of any tangible personal property purchased for resale

  in this city, either in its original form or as an ingredient of a

  manufactured or compounded product, in the regular course of a

  business.” Aurora Mun. Code § 130-198(2). To determine whether

  a company’s purchase of tangible personal property is for resale, we

  ask “whether the primary purpose of the purchase was the

  acquisition of the item for resale in an unaltered condition and

  basically unused by the purchaser.” Coors Brewing Co. v. City of

  Golden, 2013 COA 92, ¶ 32 (quoting Conoco, Inc. v. Tinklenberg, 121

  P.3d 893, 896 (Colo. App. 2005)).

¶ 13   In American Multi-Cinema, Inc. v. City of Westminster, 910 P.2d

  64, 66 (Colo. App. 1995), a division of this court held that a movie

  theater’s use of film reels received from distributors to exhibit

  motion pictures to the public constituted “use” of “tangible personal

  property” for use tax purposes. Because the theater obtained a

  finished product in the form of tangible film reels, the division held


                                      7
  it was “impossible to separate the lease of the tangible object, the

  film, from the intangible license to use it.” Id.

¶ 14   In determining whether a use tax may be applied to

  transactions with tangible and intangible aspects, our supreme

  court held in City of Boulder v. Leanin’ Tree, Inc., 72 P.3d 361, 366

  (Colo. 2003), that courts must “identify characteristics of the

  transaction at issue that make it either more analogous to what is

  reasonably and commonly understood to be a sale of goods, or more

  analogous to what is generally understood to be the purchase of a

  service or intangible right.” This “true object” test “requires a court

  to analyze the ‘totality of the circumstances’ to determine whether

  the true object . . . of the transaction is the acquisition of tangible

  personal property or the acquisition of intangible services.” Treece,

  Alfrey, Musat & Bosworth, PC, 298 P.3d at 998 (quoting Leanin’

  Tree, 72 P.3d at 365-66). If the true object is for tangible personal

  property, then the use tax applies; but, if the true object is for

  intangible property or services, then it does not. Id.

¶ 15   Examining whether the true object of a transaction is a

  tangible good or an intangible right, the Leanin’ Tree court noted


                                      8
  that a variety of factors aid this analysis, including (1) the value of

  the tangible property compared to that of the intangible property or

  service; (2) whether there was an alternative method of transfer; (3)

  the length of time the information provided retains its value; (4)

  whether there were constraints on the buyer’s ability to use the

  tangible property; (5) what was done with the tangible property after

  it yielded the intangible component; (6) whether the tangible

  property represented the finished product sought by the buyer; and

  (7) the skill and expertise used to create the tangible and intangible

  aspects of the transaction. Leanin’ Tree, 72 P.3d at 365-66. The

  Leanin’ Tree court acknowledged that while “some multi-factor or

  totality of circumstances test” is unavoidable to determine the true

  object of a transaction, the “flexibility of such an analysis will

  inevitably leave the characterization of some transactions in doubt.”

  Id. at 366-67. Thus, the circumstances of each case require

  individualized scrutiny.

¶ 16   Years later, in Cinemark USA, Inc. v. Seest, 190 P.3d 793 (Colo.

  App. 2008), a division of this court applied the Leanin’ Tree factors

  to determine whether a movie theater’s use of motion picture film


                                      9
  reels to display films to the public for profit was properly subjected

  to a local use tax. The division recognized that the theater’s

  contracts “require it to use the films precisely in the form in which

  they are distributed” and were not “an option to use an idea of the

  film distributors,” but rather were contracts to obtain “a physical

  object embodying the idea in its final form.” Id. at 797-98.

  Accordingly, the division concluded that the true object of the

  theater’s contracts with distributors was to obtain and use motion

  picture film reels — tangible final products — for exhibition;

  therefore, the transactions were properly subject to a use tax under

  the city’s code. Id. at 799.

¶ 17   In reaching this conclusion, the division noted that, unlike the

  transaction in Leanin’ Tree, Cinemark’s exhibition of motion

  pictures via the tangible film reels more closely resembled “the

  method of payment for the use or exhibition of a finished piece of

  art, which the court in Leanin’ Tree acknowledged was a taxable

  event.” Id. at 798. While the division recognized that the

  transaction involved intangible copyrights, it noted that the theater

  was not “purchasing the copyright detached from the film” because


                                    10
  without “the transfer of the actual film, the license to exhibit it

  would be valueless.” Id. at 798.

                        C.   “True Object” Analysis

¶ 18   On appeal, AMC does not dispute that the data files are

  tangible personal property. However, it argues that the true object

  of the MLAs is to obtain nontaxable intangible rights: the right to

  exhibit motion pictures. AMC contends that the Leanin’ Tree

  factors support its assertion because (1) the intangible right to

  exhibit is more valuable than the tangible good — the data file —

  which is provided at no cost; (2) AMC can obtain the tangible data

  files by alternative means, and the transfer method used to obtain

  the motion pictures has no bearing on the licensing fee paid; (3) the

  information transmitted through the data files loses its value

  quickly because motion pictures generally achieve the highest value

  in the first two weeks after their release; (4) the MLAs significantly

  constrain AMC’s use of the data files; (5) AMC does not retain the

  tangible property, as it must return the portable hard drives and

  delete the data files from its servers; (6) the data files are not a

  finished product because AMC must use special hardware and


                                     11
  software to translate the data files into the visual and sound

  elements required to show a motion picture; and (7) only a

  negligible degree of skill is needed to copy the data files onto hard

  drives but the intangible value of the motion picture requires

  expertise and artistic skill to create.

¶ 19   Neither party disputes that that the percentage of admission

  sales that the distributors receive is based on the intangible aspects

  of the motion pictures, derived from the films’ intellectual and

  artistic content, rather than the value of a data file. Accordingly,

  AMC contends that under Waste Management the true object of the

  MLAs must be to obtain the intangible right to exhibit. We

  disagree.

¶ 20   In Waste Management, a division of this court concluded that

  the tangible aspects of the transaction “were merely aids” to the

  true object of providing a trash removal service. Waste Mgmt. of

  Colo., Inc., 250 P.3d at 729-30. We disagree with AMC’s explicit

  assertion that the intangible right to exhibit is more valuable than

  the tangible data file — and its implicit assertion that the intangible

  right is separable — because, as the Cinemark division recognized,


                                      12
without “the transfer of the actual film, the license to exhibit it

would be valueless.” Cinemark USA, Inc., 190 P.3d at 798. Thus,

the data files are not “merely incidental” to the licensing

agreements. Cf. Noble Energy, Inc., 232 P.3d at 299 (holding that

the true object of hiring the oil and gas well fracturing companies

was to receive an intangible service because the tangible aspects of

the service that involved the use of fracturing fluids and sands were

merely incidental). The artistic skill needed to create a motion

picture is admittedly greater than the skill needed to translate a

motion picture into a data file. But, because the data file is an

essential and necessary component to AMC’s right to exhibit, we

cannot conclude that the MLAs here more closely resemble the

purchase of a service rather than a sale (or lease) of goods. See

Leanin’ Tree, Inc., 72 P.3d at 366. Like in Cinemark, the true object

of the licensing agreements here is to obtain, for the designated

timeframe, tangible personal property that is inseparable from its

intangible attributes. See Malco Theaters, Inc. v. Roberts, No.

W2010-00464-COA-R3CV, 2011 WL 1598884, at *16 (Tenn. Ct.

App. Apr. 26, 2011) (unpublished opinion) (holding that rented films


                                   13
  were tangible property because their physical aspects were

  “inseparable from their intangible intellectual property

  components”).

¶ 21   The record supports AMC’s assertions that the MLAs

  significantly constrain its use of the data files and that the

  transmitted motion pictures quickly lose their value after their

  initial exhibition. And while the fee agreement in the MLAs is based

  on the underlying value of the motion pictures rather than the

  value of a data file, the tangible aspect of the mixed transaction

  retains value. Indeed, the data files contain copyrighted material

  protected by extensive security measures and, while later returned

  by AMC, they are not discarded as waste. Cf. Treece, Alfrey, Musat

  & Bosworth, PC, 298 P.3d at 999 (holding that, under the Leanin’

  Tree factors, the true object of the transaction was to obtain

  intangible information because “after the documents have yielded

  their intangible component, the paper may be . . . discarded”); Noble

  Energy, Inc., 232 P.3d at 298 (holding that the tangible materials

  were not the true object of the transaction but merely incidental

  because, once consumed, the tangible aspects were “disposed of as


                                     14
  waste by the taxpayer immediately following the service”). It is

  widely known that after films cease being exhibited in theaters,

  there are secondary markets where additional value is realized.

  See, e.g., United States v. Syufy Enters., 903 F.2d 659, 665 n.9 (9th

  Cir. 1990) (considering whether a movie theater’s distribution of

  motion pictures to ancillary markets for home viewing violated

  antitrust laws and recognizing that a “first-run theatrical exhibition

  enhances a film’s performance in auxiliary markets”).

¶ 22   AMC also argues that its ability to obtain motion pictures by

  alternative means, like the film reels, shows that the true object of

  the MLAs is intangible. We disagree. As AMC points out, it spent

  around $325 million nationwide and $1 million per theatre to

  convert its theaters from using the 35-millimeter film reels to digital

  equipment. Thus, returning to the film reels seems unlikely. See

  Leanin’ Tree, Inc., 72 P.3d at 365; cf. Treece, Alfrey, Musat &

  Bosworth, PC, 298 P.3d at 998 (concluding that the focus of the

  transaction was the “provision of a service” because there was an

  alternative means of transfer).




                                    15
¶ 23   We similarly reject AMC’s assertion that the data files it

  receives are not the finished product because it uses digital

  equipment to translate the data files into a motion picture. In

  Leanin’ Tree, the court recognized that the purchased art was not a

  finished product but rather was a “right to edit and publish”

  because the company used the artists’ images to create “a new

  tangible object” that would be “sold as a new product.” Leanin’

  Tree, Inc., 72 P.3d at 366. Conversely, as AMC notes, it is

  significantly constrained in its ability to use the data files. AMC is

  prohibited from using the data files other than to exhibit the motion

  pictures to its patrons — without alteration — for the agreed-upon

  exhibition period. See Treece, Alfrey, Musat & Bosworth, 298 P.3d

  at 1000 (concluding that Cinemark was distinguishable because the

  transaction was not for the “use of the physical product itself,” but

  was to obtain information and “the tangible component of the

  transaction [was] not necessarily a final product”). Although AMC

  returns the portable hard drives and deletes the data files from its

  servers, returning the tangible property here is largely immaterial.

  See Cinemark USA, Inc., 190 P.3d at 797. While the Leanin’ Tree


                                    16
  court concluded that the return of the original artwork was

  material, such a fact was important only because, as the Cinemark

  division noted, “it showed that the artwork was not being used as a

  final product.” Id. Here, while the data files are returned (or

  deleted), they retain value because they contain copyrighted

  material. Cf. Treece, Alfrey, Musat & Bosworth, PC, 298 P.3d at

  998-99 (holding that the transaction’s focus was for the purchase of

  a service rather than on the tangible provision of paper because the

  value of the physical paper was “minimal compared to the value of

  the services and labor” and “after the documents have yielded their

  intangible component, the paper may be . . . discarded”). Applying

  the relevant Leanin’ Tree factors, we conclude that access to the

  tangible data files was the true object of the MLAs because the

  value of the inseparable intangible copyright was dependent upon

  the data files being transmitted to AMC for use within the City. See

  Cinemark USA, Inc., 190 P.3d at 798.

¶ 24   Lastly, we reject AMC’s contention that Cinemark is

  inapplicable here because it involved a theater’s use of film reels

  rather than the new digital equipment and digital data files that


                                    17
  AMC now uses. AMC has historically paid a use tax on its licensing

  agreements, and we perceive no basis to abandon the Cinemark

  analysis because of a technological change. AMC does not deny

  that the MLAs involve the use of tangible personal property: the

  data files. And whether the motion pictures are transmitted via film

  reels or data films is of no moment; the underlying transaction

  remains the same. See Leanin’ Tree, Inc., 72 P.3d at 366; Cinemark

  USA, Inc., 190 P.3d at 798; see also Malco Theaters, Inc., 2011 WL

  1598884, at *16 (holding that the “fact that Malco may now receive

  the motion pictures via electronic transmission is irrelevant”).

                        D.    Use Tax Exemption

¶ 25   AMC next contends that it is exempt from the City’s use tax

  because, even assuming that the true object of the MLAs is to

  obtain the tangible data files, the purpose of the MLAs is to acquire

  the data files for resale to its movie patrons. AMC argues that

  because it cannot alter the data files, but rather may only use its

  unaltered version to exhibit to its patrons, the final consumers of

  the motion pictures are its patrons. AMC also asserts that the

  exemption’s purpose is to avoid double taxation of the same item,


                                    18
  and because AMC pays a sales tax on its admission fees, the City’s

  use tax on AMC’s MLA fees constitutes a double tax on its

  admission sales.

¶ 26   We agree with previous divisions of this court, which have held

  that a theater’s exhibition of motion pictures is not a resale. See

  Cinemark USA, 190 P.3d at 799 (“Unlike in Leanin’ Tree, where the

  ultimate consumers were the purchasers of the greeting cards[,] . . .

  Cinemark purchases the right to show copyrighted film reels and

  uses them as finished products . . . . Movie viewers are no more

  consumers of film reels than they are of seats, screens, or

  projectors used in movie theaters. Thus, because it acquires and

  displays a final product, we conclude Cinemark is the end user or

  consumer of the film reels.”); Am. Multi-Cinema, Inc., 910 P.2d at 67

  (“The customers who pay a fee to watch the running of a motion

  picture are not given possession of the tangible film, nor do they

  seek to obtain such possession or any other right thereto. The fee

  they pay is simply to be able to view images from the film as they

  are projected onto the screen. Hence, the charge made by plaintiff

  for the privilege of viewing such images does not constitute a re-sale


                                    19
  of the film; it is plaintiff, not its customers, who is the ultimate

  ‘user’ of such tangible personal property.”); see also Expedia, Inc.,

  ¶ 18; Waste Mgmt. of Colo., Inc., 250 P.3d at 725. Because AMC

  does not resell the digital files but rather exhibits motion pictures

  for profit, it is the final consumer and is not exempt from the use

  tax under section 130-198(2) of the City’s tax code. See A.B.

  Hirschfeld Press, Inc. v. City & Cty. of Denver, 806 P.2d 917, 923-24

  (Colo. 1991) (holding that a commercial printing company’s

  purchase of “pre-press materials” was not exempt from a use tax as

  a resale because it “could not perform the services it was

  contractually obligated to perform for its customers without [using]

  the pre-press materials. . . . Hirschfeld made substantial use of the

  pre-press materials for its own direct and indirect benefit”); Coors

  Brewing Co., ¶ 39 (“[I]f a purchaser permanently diverts materials

  or items to its own use, the purchase of the materials or items is

  subject to [a] use tax because it is a retail purchase.”).

¶ 27   Nor can we conclude that a double taxation has occurred. See

  Am. Multi-Cinema, 910 P.2d at 67 (“The use tax is levied upon

  plaintiff for the privilege of using the film by exhibiting it. The


                                     20
admissions fee is levied upon its customers for the privilege of

viewing the screen where the moving images are projected. Hence,

not only is each tax levied upon different persons, but it is levied

upon the exercise of different privileges arising out of separate

transactions.”). While the sales tax on AMC’s admission revenues

may impact its bottom line, AMC’s inability to retain the entirety of

its gross admission sales does not mean that double taxation has

occurred. Rather, the use tax is “complimentary to sales tax, but is

paid directly to the city rather than to a vendor collecting on behalf

of the city” and “is simply ‘sales tax that wasn’t paid to the vendor.’”

City of Aurora, General Use Tax, https://perma.cc/V5Y9-UNNW.

The purpose of the City’s use tax is to ensure that every person

using, distributing, or consuming tangible personal property within

the city’s limits pay a use tax because it is “exercising a taxable

privilege.” Aurora Mun. Code § 130-33. Because AMC is using

data files within the City’s limits and is not reselling them — and its

licensing agreements with distributors are not taxed elsewhere —

AMC is not subjected to double taxation under the City’s tax code.

See Noble Energy, Inc., 232 P.3d at 296 (recognizing that the party


                                   21
  claiming a tax exemption bears the burden of proving that such an

  exemption applies).

¶ 28   Alternatively, AMC contends that it uses the data files as “an

  ingredient of a manufactured or compounded product” for resale

  because the data files are transformed, using projectors, a screen,

  sound systems, and other equipment to become a new product for

  AMC’s patrons. We disagree.

¶ 29   The data files are not “an ingredient of a manufactured or

  compounded product” because AMC receives a final, finished

  product that it exhibits to its patrons unaltered. See Coors Brewing

  Co., ¶ 35 (“[I]tems or materials that are incorporated into a

  company’s product and then sold to a consumer are not purchased

  for resale.”). Indeed, the MLAs expressly prohibit AMC from altering

  the films. And, as AMC acknowledges, minimal expertise is needed

  to transmit the motion pictures onto data files and then project the

  movies on to a screen for patrons to view. Because AMC exhibits

  the digital files for profit and is unable to alter or transform the

  motion pictures contained on the digital files, its MLA fees are not




                                     22
  exempt from the City’s use tax as “an ingredient of a manufactured

  or compounded product” under section 130-198(2).

                           III.   Conclusion

¶ 30   We affirm the judgment.

       JUDGE TOW and JUDGE CASEBOLT concur.




                                   23
