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Ezel / Tax Rulings / TX
TX 8509L0666E08 Sales and/or Use Tax (State,Local,MTA) 1985-09-18

Did equipment trade-in value reduce the amount subject to Texas sales tax?

Short answer: Yes, if the trade-in was a taxable item of a type the retailer normally sold.

Apply this to your situation

This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1985 Texas Comptroller taxpayer-response letter containing a short rule for equipment trade-ins. The reduction depended on the trade-in being a taxable item of a type normally sold by the retailer, and the letter expressly says different facts could change the opinion. Current trade-in, valuation, retailer-inventory, invoice, and sales-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The consideration given for an equipment trade-in reduced the taxable amount of the new sale when the trade-in was a taxable item of a type the retailer normally sold.

Common questions

Did the trade-in reduce the taxable sales price? Yes, under the stated condition.

What condition applied? The trade-in had to be taxable property of a type normally sold by the retailer.

Did the letter identify a specific rule number? No.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

September 18, 1985

Dear ***:

Thank you for your recent letter which is restated with response below.

Per Tel/Con of today with *** of your office concerning sales
tax, ** advised that if we purchase a piece of equipment and
trade-in equipment, that sales tax would be charged on the amount after
the trade-in was deducted. (Example: Equipment costing $*,
Trade-in equip. $*, Sales tax would be charged on Bal.
of $****.)

Please confirm this decision.

Response: The consideration given for the Trade-in reduces the taxable
amount of the sale if the Trade in is a taxable item of a type normally
sold by the retailer.

I am enclosing an appropriate rule for your reference.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at
the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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