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Ezel / Tax Rulings / TX
TX 8702L0799A03 Sales and/or Use Tax (State,Local,MTA) 1987-02-23

Under Texas's aggregate reporting method, what happened when equipment was sold, traded in, or scrapped before the 48-month period ended?

Short answer: Sold equipment left the asset formula as of the sale date. Traded-in or scrapped equipment stayed in the formula for the rest of the four-year period.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 1987 Texas Comptroller letter applies a historical 48-month aggregate reporting method to sold, traded-in, and scrapped equipment. Aggregate-method, asset, sale, trade-in, scrap, reporting, credit, and local-tax rules may have changed or the method may no longer apply. STAR documents may no longer represent current policy even when not marked superseded. Identities 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 Texas Comptroller gave different instructions for equipment sold before the 48-month aggregate-method period ended and equipment traded in or scrapped.

Equipment sold was removed from the asset formula as of the sale date. Equipment traded in or scrapped remained in the asset formula for the rest of the four-year period.

What this means for you

Disposal did not always end the asset's reporting life. An actual sale stopped the formula treatment at sale, while a trade-in or scrapping did not.

Common questions

What happened after an equipment sale? The asset was removed from the formula on the sale date.

What happened after a trade-in? The asset stayed in the formula through the four-year period.

What happened after scrapping the equipment? The same continued formula treatment applied.

Citations and references

  • The letter cited no numbered statute or Comptroller rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 23, 1987

Dear ***:

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

We have switched to the Aggregate Method of reporting tax due
on new assets and I feel it will help us greatly, in paying the
correct amount of tax due. We have come up with a few other
questions and would appreciate your response to them.

  1. What happens if I sell a piece of equipment before the 48
    months have expired?

Do I continue to pay the tax till the 48th month or do I stop?

Response: You should remove the piece of equipment from the formula as
of the sale date.

  1. What happens if I trade in or scrap the piece of equipment before
    the 48 months have expired?

Do I continue to pay the tax till the 48th month or do I stop?

Response: You should continue to carry the equipment in the asset
formula for the remainder of the four year period.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512-463-4600. You may write me at the Tax Administration Division.

Sincerely,
Al Van Allen
Tax Policy Section
Tax Administration Division

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