California Real Estate Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

When a business has been sold and the State Board of Equalization verifies that all required taxes have been paid, the document that is issued to the buyer is a clearance receipt. This receipt serves as proof that the seller has fulfilled their tax obligations, thereby protecting the buyer from any potential claims for unpaid taxes related to the business.

A clearance receipt is particularly important because it reassures the buyer that they are not inheriting any tax liabilities associated with the business operations prior to the sale. This is a critical step in the transaction process, as it facilitates a smooth transition and reduces the risk of legal or financial complications for the buyer post-purchase.

The other options may relate to tax situations but do not specifically denote the assurance provided to a buyer regarding the payment status of taxes in the context of a business sale. Hence, the clearance receipt is the appropriate documentation issued in this scenario.