     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
                                                              October 4, 2018

                               2018COA147

No. 17CA1605 Big Sur Waterbeds v. City of Lakewood —
Taxation — Sales and Use Tax

     The City of Lakewood imposes use tax on tangible personal

property purchased at retail and used in the city. The use tax does

not apply to wholesale purchases (i.e., purchases for resale to

others). A division of the Colorado Court of Appeals considers

whether Lakewood properly imposed use tax on certain purchases

of property by furniture retailers from furniture wholesalers.

Specifically, Lakewood assessed use tax on furniture that the

retailers displayed on their showroom floors for their customers to

peruse and try out. The retailers ultimately sold all displayed

furniture to customers, who paid Lakewood’s sales tax on the sales.

     The division holds that Lakewood’s use tax does not apply to

the retailers’ purchases and minor use of the furniture for display
because the primary purpose of those purchases was to resell that

furniture. As a result, the division affirms the district court’s

judgment cancelling the tax assessments.
COLORADO COURT OF APPEALS                                         2018COA147


Court of Appeals No. 17CA1605
Jefferson County District Court No. 16CV30877
Honorable Laura A. Tighe, Judge


Big Sur Waterbeds, Inc.; Denver Mattress Company, LLC; and Sofa Mart, LLC,

Plaintiffs-Appellees,

v.

City of Lakewood, Colorado; and Larry Dorr, in his official capacity as Finance
Director of the City of Lakewood, Colorado,

Defendants-Appellants.


                             JUDGMENT AFFIRMED

                                    Division VII
                           Opinion by JUDGE NAVARRO
                        J. Jones and Kapelke*, JJ., concur

                           Announced October 4, 2018


Silverstein & Pomerantz LLP, Neil I. Pomerantz, Mark E. Medina, Michelle
Bush, Denver, Colorado, for Plaintiffs-Appellees

Hoffman, Parker, Wilson & Carberry, P.C., M. Patrick Wilson, M. Keith Martin,
Denver, Colorado, for Defendants-Appellants


*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2018.
¶1    Plaintiffs, Big Sur Waterbeds, Inc., Denver Mattress Co., LLC,

 and Sofa Mart, LLC, purchase furniture (tax free) from wholesalers

 worldwide and resell it in stores across the country, including in the

 City of Lakewood. At each Lakewood store, plaintiffs provide a

 showroom in which they display some furniture for customers to

 peruse and try out. Plaintiffs also maintain warehouses, where

 they store the bulk of their inventory. They ultimately sell all the

 furniture — including the displayed furniture — and fill customer

 orders from either the warehouses or the showrooms. Plaintiffs’

 customers pay Lakewood’s sales tax on each purchase.

¶2    Lakewood assessed use tax on plaintiffs’ purchases of the

 displayed furniture from 2012 to 2015, on the theory that plaintiffs

 purchased the displayed furniture at retail for their own use in

 advertising their products. Plaintiffs challenged the assessments in

 the district court, which held a bench trial. They argued that, like

 all the furniture they buy, they purchased the displayed furniture

 at wholesale — that is, primarily for resale — and thus those

 purchases were exempt from use tax. Employing the “primary

 purpose” test from A.B. Hirschfeld Press, Inc. v. City and County of

 Denver, 806 P.2d 917, 918-26 (Colo. 1991), the court agreed with


                                    1
 plaintiffs and cancelled Lakewood’s use tax assessments.

 Addressing an issue of first impression, we also conclude that

 plaintiffs purchased the displayed furniture primarily for resale.

 Therefore, we affirm the judgment cancelling the assessments.

                      I.     Standard of Review

¶3    We review de novo a district court’s interpretation of a tax

 code. Leggett & Platt, Inc. v. Ostrom, 251 P.3d 1135, 1140 (Colo.

 App. 2010). Generally, when interpreting tax provisions, we resolve

 doubts in favor of the taxpayer. Noble Energy, Inc. v. Colo. Dep’t of

 Revenue, 232 P.3d 293, 296 (Colo. App. 2010). When a taxpayer

 claims a statutory exemption from taxation, however, we presume

 that taxation is the rule and resolve doubts in favor of the taxing

 authority. Id.

¶4    “Following a bench trial, we defer to a trial court’s factual

 findings unless they are so clearly erroneous as to find no support

 in the record.” Target Corp. v. Prestige Maint. USA, Ltd., 2013 COA

 12, ¶ 24.

              II.    Lakewood’s Code and Regulations

¶5    Lakewood’s municipal code imposes a three percent use tax

 “for the privilege of storing, using, or consuming in the City any


                                    2
 articles of tangible personal property or taxable services purchased

 at retail.” Lakewood Mun. Code 3.01.210 (emphasis added). The

 use tax does not apply if the purchaser has already paid sales tax

 on the item, either to Lakewood or to another municipality, in an

 amount equal to or greater than the amount of Lakewood’s tax. Id.

 at 3.01.220(A)(1), (E).

¶6    “Retail sale” is defined as “all sales except wholesale sales

 made within the city.” Id. at 3.01.020. A “[w]holesale sale” is “a

 sale by wholesalers to retail merchants, jobbers, dealers, or other

 wholesalers for resale and does not include a sale by wholesalers to

 users or consumers not for resale . . . .” Id.

¶7    Consistent with the definitions of retail sale and wholesale

 sale, the code also expressly exempts from use tax “the storage,

 use, or consumption of any tangible personal property purchased

 for resale in the city, either in its original form or as an ingredient of

 a manufactured or compounded product, in the regular course of a

 business.” Id. at 3.01.230(B).1


 1 This code provision exempting property from use tax mirrors the
 provision imposing use tax: both provide that use tax does not apply
 to wholesale sales (i.e., purchases for resale). The parties disagree,
 therefore, about whether this case presents a tax-imposition

                                     3
¶8    Lakewood’s sales and use tax regulations supply guidance on

 interpreting the code. See id. at 3.01.070 (“The City Council shall

 adopt rules and regulations in conformity with this chapter for the

 proper administration and enforcement of this chapter.”). One such

 regulation explains that “[u]se tax is a complement to sales tax.”

 Lakewood Sales and Use Tax Reg. 3.01.300(1)(b) (adopted June 24,

 1985), https://perma.cc/2LGV-L4B7.2 Because sales tax is

 imposed only on retail sales, which are sales to the user or

 consumer of property or services sold, “use tax shall not apply to

 the storage, use[,] or consumption of tangible personal property

 purchased by a licensed retailer for resale within the regular course

 of a business.” Id.

 dispute (requiring doubts to be resolved against taxation) or a tax-
 exemption dispute (requiring doubts to be resolved in favor of
 taxation). We need not settle this disagreement. Even assuming
 that plaintiffs claim an exemption, they should prevail because they
 are clearly entitled to the exemption, as we will explain.

 2 We apply this version of the regulations because it was admitted
 into evidence at trial without objection. See Alpenhoff LLC v. City of
 Ouray, 2013 COA 9, ¶ 10 (“[A]ppellate review extends only to those
 [municipal] code provisions included in the record.”). While these
 regulations have apparently been amended since their 1985
 adoption, see Lakewood Sales and Use Tax Rules, Regs. & Special
 Regs. (amended effective June 12, 1993 and revised Oct. 21, 1994),
 https://perma.cc/SG2X-WV4L, the relevant regulatory language
 discussed in this opinion has not changed.

                                   4
¶9     Regulation 3.01.300(1)(b) also cautions, however, that

             [t]angible personal property that was
             purchased tax-free for resale or as an
             ingredient of a manufactured or compounded
             product and subsequently withdrawn from
             stock for the purchaser’s own use or
             consumption shall be taxed at the acquisition
             cost of all materials. The tax liability attaches
             at the time that the tangible personal property
             is withdrawn from stock.

  Id. (emphasis added).

¶ 10   In addition, a special regulation entitled “Initial Use of

  Property” states:

             Any item purchased for use or consumption by
             the purchaser is subject to sales or use tax at
             the time of purchase, even though the item
             shall be resold later in either its original or
             altered form. A tax-free purchase is taxable in
             full at the first time it is used by the purchaser
             for a nonexempt purpose.

             (Example: A junkman may not buy a new car
             tax-free under the theory that the car is going
             to be junked someday and resold through his
             business for scrap.)

  Lakewood Sales and Use Tax Special Regs., at 41.

           III.       Purchased “At Retail” or “At Wholesale?”

¶ 11   Lakewood contends that plaintiffs’ “initial purchase and

  subsequent use of display furniture is a taxable event.” According

  to Lakewood, “all of [plaintiffs’] inventory purchases were initially

                                      5
  treated as exempt wholesale purchases for resale.” But “[l]ater,

  when [plaintiffs] withdrew a portion of this wholesale inventory for

  use as demonstration and promotion tools, the transactions in

  which the display models were purchased were properly

  recharacterized as taxable retail transactions.”

¶ 12   For its taxation theory, Lakewood relies on the Initial Use of

  Property special regulation as well as regulation 3.01.300(1)(b).

  Respectively, those regulations ask whether the displayed furniture

  was (1) primarily purchased for use, not for resale; or (2) purchased

  for resale initially but later withdrawn from stock for plaintiffs’ own

  use (i.e., whether their placing the furniture on display revealed

  that the primary purpose of their purchase was for their own use

  rather than for resale). Because both regulations turn on plaintiffs’

  primary purpose, we first look to the Hirschfeld test.

                     A.    The Primary Purpose Test

¶ 13   In Hirschfeld, 806 P.2d at 918-26, the supreme court

  considered use tax provisions from Denver’s tax code that are

  nearly identical to Lakewood’s code. The supreme court explained

  that, in assessing whether a purchase was made “at retail” or “for

  resale,” courts should apply “a primary purpose” test. Id. at 921.


                                     6
Under this test, “a purchase of an item of tangible personal property

is a purchase for resale and therefore not a purchase at retail if the

primary purpose of the transaction is the acquisition of the item for

resale in an unaltered condition and basically unused by the

purchaser.” Id. Five factors inform this determination:

     1)       “the actual conduct of a purchaser subsequent to a

              disputed purchase,” id.;

     2)       “the nature of the purchaser’s contractual obligations,

              if any, to use, alter[,] or consume the property to

              produce goods or perform services,” id.;

     3)       “the degree to which the items in question are

              essential to the purchaser’s performance of those

              obligations,” id.;

     4)       “the degree to which the purchaser controls the

              manner in which the items are used, altered[,] or

              consumed prior to their transfer to third parties,” id.;

              and

     5)       “the degree to which the form, character[,] or

              composition of the items when transferred to third

              parties differs from the form, character[,] or


                                   7
                 composition of those items at the time they were

                 initially purchased,” id.

¶ 14   If, after considering these factors, a court concludes that the

  purchaser acquired the property at issue primarily for resale in an

  unaltered condition and basically unused, the use tax cannot apply

  “even if the purchaser were to make minor use of the item.” Id.; see

  also Coors Brewing Co. v. City of Golden, 2013 COA 92, ¶ 48

  (concluding that Coors purchased scrap metal primarily for resale

  even where it made “minor use” of the scrap during the

  manufacturing process). This recognition that minor use does not

  trigger a use tax comports with Lakewood’s code, which exempts

  property purchased for resale even if it is used to some extent. See

  Lakewood Mun. Code 3.01.230(B) (Use tax shall not apply to “the

  storage, use, or consumption of any tangible personal property

  purchased for resale . . . .”).

                        B.    Additional Background

¶ 15   In each showroom, plaintiffs typically displayed samples of

  each item of furniture available for purchase. They stored the rest

  of their inventory in warehouses attached to the showrooms or in

  larger distribution centers in Denver and Aurora. Customers


                                      8
  perusing the showrooms were invited to try out the furniture by, for

  example, sitting on couches, turning on lamps, or lying on beds. At

  all times, including at the time plaintiffs purchased the furniture

  from wholesalers, plaintiffs intended to sell all the furniture —

  including the displayed furniture.

¶ 16   Following a three-day bench trial, the district court made

  extensive factual findings. It found that all of plaintiffs’ floor

  furniture was always available for sale at the discretion of plaintiffs’

  employees. Although employees generally preferred to fill orders

  from the warehouses instead of from the showroom floors,

  employees “often [sold] floor model items” in certain situations.

  Those situations included

             (a) when a customer indicate[d] an immediate
             need for the item; (b) when the item on display
             [was] discontinued or “rotated” pursuant to a
             pre-determined schedule; (c) when the store
             manager desire[d] to change the furniture
             being displayed on the showroom floor;
             (d) where the item on display [was] a one-of-a-
             kind item (e.g., furniture using reclaimed
             wood); (e) when the furniture on display [was]
             needed to provide furniture to a customer who
             received a damaged or defective item upon
             delivery; and (f) where the item [was]
             characterized as “home décor” or an accessory
             item.



                                      9
  The court found that, when employees chose not to sell floor model

  items, “it was not because these items were not for sale; it was

  because they do not want to spend the time to replace a floor

  model, and they ‘don’t like to have a gap on the floor’ that would

  cause them to miss a sale.”

¶ 17   The court further found that displayed items remained on the

  showroom floor for an average of six to twelve months. Roughly

  40% of the displayed items were sold within the first six months,

  and about 30% remained on the floor longer than one year. The

  court explained that “[a]ll of [the] floor models are eventually sold,”

  a fact Lakewood did not dispute.

¶ 18   Regarding price, the court determined that “floor model items

  were often sold at full sales price where a customer exhibited an

  immediate need for the item.” Also, “discounts up to 50% or more

  were common on warehouse items and floor models alike.” Overall,

  the court found “no meaningful difference between the frequency

  and size of the discounts on floor models and the discounts on

  warehouse items.”




                                     10
¶ 19     As for tax treatment, “[plaintiffs] did not depreciate any of the

  floor model items for income tax, accounting, or financial reporting

  purposes.”

¶ 20     Of the plaintiffs, only Denver Mattress was obligated by

  contract to take any action regarding the furniture. Denver

  Mattress agreed “to reserve a number of ‘slots’ on its showroom

  floor for [certain] vendors’ mattresses and to give the vendors’

  products fair placement on the showroom floor.”

¶ 21     The court outlined the procedures plaintiffs employed to

  display products on the showroom floors:

        “Un-boxing or un-wrapping the product.”

        “Assembling tables, beds, desks, and other items (attaching

         table and sofa legs, installing knobs, connecting

         footboards/headboards, building chairs, and plugging in

         adjustable bases).”

        “‘Breaking in’ the cushions and pillows on sofas and chairs.”

        “For overhead light fixtures and lamps, hard-wiring to the

         building’s electrical system and installing lightbulbs.”




                                      11
        “For mattresses, trimming threads remaining from the

         manufacturing process and installing a ‘shoe protector’ at the

         foot of the mattress.”

        “Staging the display models in ‘vignettes’ with other furniture

         and home décor or accessories to mimic a real living room.”

  The court reviewed witness testimony and found that, although

  plaintiffs often changed the “packaging” of their inventory to

  prepare it for the showroom, the showroom furniture was “well-

  maintained and kept in a like-new condition.”

¶ 22     The court then applied the Hirschfeld test and concluded that

  plaintiffs purchased the displayed furniture primarily for resale.

                C.   Application of the Primary Purpose Test

¶ 23     Lakewood does not challenge any of the district court’s factual

  findings as clearly erroneous. So, we accept them all. We review de

  novo the application of the Hirschfeld primary purpose test to those

  facts. See Conoco, Inc. v. Tinklenberg, 121 P.3d 893, 896 (Colo.

  App. 2005); see also Coors, ¶ 42.




                                      12
                1.      Plaintiffs’ Actual Conduct Following
                           the Purchase of the Furniture

¶ 24   Plaintiffs purchased large quantities of furniture, all of which

  they intended to — and did — sell. Plaintiffs selected a sampling of

  their inventory to display in their showrooms for customers to try

  out before purchasing. As the district court noted, plaintiffs’

  conduct demonstrated that the “primary and overriding concern in

  [their] treatment of [the] floor models” was to preserve the

  marketability of the displayed furniture because all inventory would

  eventually be sold.

¶ 25   When customers purchased furniture, their orders were filled

  from the warehouse or, sometimes, directly from the showroom

  floor. Customers paid sales tax on all purchases.

¶ 26   Plaintiffs treated the displayed furniture as inventory for

  income tax, accounting, and financial reporting purposes. Thus,

  they did not derive any of the tax benefits, such as depreciation,

  that could have come with non-inventory status.

¶ 27   We conclude that the totality of plaintiffs’ actual conduct

  shows that they purchased the displayed furniture primarily for

  resale in an unaltered condition and basically unused. The fact



                                      13
  that plaintiffs permitted customers to view and try out the displayed

  furniture before it was sold does not indicate otherwise.

¶ 28   Lakewood stresses that the furniture remained on the floor for

  an average of six to twelve months, and sometimes longer. For a

  couple of reasons, however, the length of time the furniture stayed

  on the floor is not especially illuminating. First, Lakewood’s

  emphasis on time seems inconsistent with its taxation theory — i.e.,

  once plaintiffs removed the furniture from the warehouse and

  displayed it on the showroom floor to promote the product, a

  taxable event occurred. The length of time the furniture remained

  on the floor appears to be immaterial under this theory.

¶ 29   Second, the evidence did not show that any furniture item

  remained on the showroom floor longer, on average, than a similar

  item remained in the warehouse. The evidence did not reveal how

  long furniture stayed in the warehouse on average. The testimony

  showed, however, that furniture sometimes stayed in the warehouse

  for six to twelve months, or longer. And Lakewood did not assess

  use tax on warehouse items, no matter how long they remained.

  True, evidence indicated that many more items were sold from the

  warehouses than from the showrooms. But this fact simply reflects


                                    14
  that many more items were stored in the warehouses than in the

  showrooms and that plaintiffs’ employees generally preferred to sell

  warehouse items first so they would not need to replace the

  furniture on the floor.

¶ 30   Hence, more significant than the time spent on the showroom

  floor is whether the displayed furniture was for resale and was sold

  in an unaltered condition and basically unused.3 The record

  demonstrates that the furniture was for resale while on the floor, it

  was sold in essentially new condition, and displaying the furniture

  for advertising was therefore a minor use that furthered the resale

  purpose. See Coors, ¶¶ 54-57 (concluding that purchase of scrap

  aluminum was primarily for resale where Coors used the scrap

  “only fleetingly” in the manufacturing process); see also C. F. & I.

  Steel Corp. v. Charnes, 637 P.2d 324, 330 (Colo. 1981) (concluding

  that no taxable event occurred where steel corporation “brief[ly]

  utiliz[ed]” raw materials by diverting them “to its own temporary use

  and then back to the normal steel-making process”).

  3 Illustrating this point is Lakewood’s treatment of certain “out-the-
  door” items in the showroom, which consisted of small merchandise
  that was regularly sold from the floor (e.g., vases and pillows).
  Lakewood excluded those items from use tax no matter how long
  they remained on the floor because they were always for resale.

                                    15
   2.    Plaintiffs’ Contractual Obligations to Use, Alter, or Consume
             the Furniture to Produce Goods or Perform Services

¶ 31    Plaintiffs’ only contractual obligation regarding the displayed

  furniture was Denver Mattress’s duty to give fair placement on the

  showroom floor to some vendors’ mattresses. As the district court

  explained, “[T]hese contractual obligations related only to

  prominent placement on the showroom floor; not to committing

  Denver Mattress to any manner of usage, alteration, or

  consumption that differed from its treatment of other floor models

  not governed by the contract.” Beyond prominent floor placement,

  those obligations did not require any use.

¶ 32    In contrast, in Hirschfeld, a printing company purchased pre-

  press materials — such as printing plates, film, and transparencies

  — for use in printing brochures, letterheads, and greeting cards for

  its customers. 806 P.2d at 918. In holding that the company’s

  purchase of these materials was subject to the use tax, the supreme

  court noted, “[I]t is clear that Hirschfeld could not perform the

  services it was contractually obligated to perform for its customers

  without making extensive use of the pre-press materials.” Id. at

  923. “Hirschfeld substantially used and often altered the pre-press



                                    16
  materials in performing its contractual obligations to its customers.”

  Id. at 924 (emphasis added).

¶ 33   Plaintiffs here had no contractual obligations to their

  customers to display the furniture. At most, one plaintiff had

  obligations to certain vendors as to some products. So, unlike in

  Hirschfeld, plaintiffs had no contractual obligations to customers

  that would require them to use, alter, or consume any furniture to

  produce goods or perform services. Cf. City of Colorado Springs v.

  Inv. Hotel Props., Ltd., 806 P.2d 375, 379 (Colo. 1991) (holding that

  primary purpose of hotel’s purchase of guest room furniture was for

  the hotel’s “use thereof in fulfilling its contractual obligations to its

  guests”).

¶ 34   Lakewood argues that, because this case arose in the retail

  context as opposed to the manufacturing context, “some deviation

  from the exact . . . Hirschfeld factual predicate is warranted.” We

  agree that the absence of the contractual obligations discussed in

  Hirschfeld is not dispositive. Still, as Lakewood acknowledges, “a

  contract requiring use may be evidence of a taxable interim

  use . . . .” Therefore, the absence of such a contract tends to

  support plaintiffs’ view that they purchased the displayed furniture


                                      17
  primarily for resale. Cf. Coors, ¶ 44 (“Although the manufacturer is

  contracted to manufacture beer can ends and tabs, it is not

  obligated to incorporate the scrap into those ends and tabs.

  Rather, it is free to resell the scrap [to other customers].”).

       3.   Degree to Which the Furniture is Essential to Plaintiffs’
                Performance of Their Contractual Obligations

¶ 35    All parties seem to agree, and the district court found, that

  this factor does not add much to the analysis because plaintiffs did

  not have contractual obligations (to customers) to use, alter, or

  consume the displayed furniture to produce goods or perform

  services. As discussed, however, the lack of pertinent contractual

  obligations cuts in plaintiffs’ favor to some extent.

  4.    Degree to Which Plaintiffs Controlled the Manner in Which the
          Furniture Was Used, Altered, or Consumed Prior to Sale

¶ 36    The supreme court found this factor germane in Hirschfeld

  because Hirschfeld purchased the pre-press materials to use in

  performing contractual obligations to its customers and “the

  manner and extent of Hirschfeld’s use of the items was vested solely

  in Hirschfeld.” 806 P.2d at 923. This factor is perhaps less

  relevant here, where plaintiffs had no contractual obligations to




                                     18
  use, alter, or consume the furniture to produce goods or perform

  services.

¶ 37   To the extent this factor remains relevant, we note that

  plaintiffs controlled the manner in which the furniture was

  displayed. For instance, plaintiffs removed the items from the

  warehouses, unboxed them, assembled them into functioning

  furniture, and arranged them in groupings to simulate living spaces

  so that customers could try them out. Plaintiffs also controlled the

  length of time that displayed items remained on the showroom

  floors.

¶ 38   On the other hand, plaintiffs’ customers largely controlled

  their interactions with the displayed furniture. Plaintiffs’ employees

  sometimes encouraged customers to sit on a sofa or lie on a bed,

  but customers were generally free to roam around the showrooms

  and test the furniture as they pleased.

¶ 39   Consequently, this factor does not clearly support either

  plaintiffs’ position or Lakewood’s position.




                                    19
       5.   Degree to Which Plaintiffs Altered the Form, Character,
                or Composition of the Furniture Prior to Sale

¶ 40    Lakewood contends that plaintiffs altered the form or

  composition of the displayed furniture when they assembled it for

  staging in the showrooms. Lakewood also argues that, after such

  display, the character of the furniture went “from brand new to

  used.”

¶ 41    As discussed by the district court, however, plaintiffs’

  unboxing and assembly constituted merely a change in packaging

  of the displayed furniture, not an alteration of form, character, or

  composition. We find the reasoning in Coors instructive. The

  division concluded that “the process that collects the [aluminum]

  scrap and compresses it into briquettes is a change in packaging,

  not a change in ‘form, character[,] or composition.’ . . . ‘[S]imply put,

  [the manufacturer] purchased aluminum and ultimately resold

  aluminum.’” Coors, ¶ 51 (quoting Hirschfeld, 806 P.2d at 921).

¶ 42    Likewise, plaintiffs purchased sofas, beds, chairs, etc. and

  ultimately resold sofas, beds, chairs, etc. The district court found

  that the furniture was well maintained and sold in “like-new




                                     20
  condition” on generally the same price terms as warehouse

  furniture. Hence, this factor also weighs in plaintiffs’ favor.

¶ 43   In sum, the Hirschfeld factors in combination weigh decidedly

  in plaintiffs’ favor. Under that test, then, plaintiffs’ primary

  purpose in purchasing the displayed furniture was for resale.

               D.    Returning to Lakewood’s Regulations

¶ 44   Lakewood relies heavily on its special regulation pertaining to

  “Initial Use of Property,” which states that any item purchased “for

  use or consumption by the purchaser” is subject to tax for that use

  even if the item is eventually resold in its original condition.

  Lakewood Sales and Use Tax Special Regs., at 41. Lakewood says

  that, under this regulation, whether the item shows physical signs

  of use is irrelevant. The item could be used extensively and then

  resold in its original condition, in which case the use tax would still

  apply.

¶ 45   That may be true, but the Initial Use regulation — by its plain

  terms — applies only to items purchased for the purchaser’s use or

  consumption. As explained, plaintiffs purchased the displayed

  furniture primarily for resale, not for their own use or consumption;

  so the Initial Use regulation does not control here.


                                     21
¶ 46   Nor does regulation 3.01.300(1)(b)’s explanation that the use

  tax applies to items “withdrawn from stock.” That provision

  pertains to tax-free purchases for resale that are later removed from

  inventory “for the purchaser’s own use or consumption.” But

  plaintiffs never withdrew the displayed furniture from stock. The

  record reveals that the displayed furniture was always available for

  resale. Sometimes it was sold quickly; other times it took more

  than a year. But it was available for sale and always sold

  eventually.

¶ 47   Finally, our reading of the tax code and regulations is

  confirmed by Lakewood’s special regulation on “Automobile Dealers

  and Demonstration Vehicles.” Lakewood Sales and Use Tax Special

  Regs., at 31. A dealer’s “use of an inventory or stock vehicle is not

  subject to a use tax if [the] vehicle is available for and in fact used

  for the promotion of business.” Id. According to Lakewood, this

  special regulation exempts a use to which the use tax would

  otherwise apply. All tax regulations, however, must conform to the

  tax code. See Lakewood Mun. Code 3.01.070. Therefore, this

  regulation does not create an exemption from the use tax that is not

  intended by the tax code itself. Instead, this regulation clarifies


                                     22
  how the use tax exemptions of the code apply to demonstration

  vehicles used by dealers to promote sales. Plaintiffs’ use of the

  displayed furniture for demonstration purposes is analogous; so,

  the use tax consequences should be analogous.

¶ 48   For all the reasons discussed above, the use tax does not

  apply to plaintiffs’ purchase of the displayed furniture.4

                          IV.      Conclusion

¶ 49   The judgment is affirmed.

       JUDGE J. JONES and JUDGE KAPELKE concur.




  4 Because Lakewood’s code and regulations, considered in light of
  Colorado case law, are sufficient to resolve this case, we need not
  address the out-of-state cases cited by the parties. Besides, none of
  those cases brings much to the table because none involved facts
  very similar to those here.

                                    23
