Were estate beneficiaries' auction purchases exempt as joint-ownership transfers when they had no common ownership with the estate before or after each sale?

Plain-English summary

The estate beneficiaries' auction purchases were subject to sales tax.

The joint-ownership exemption applied only when the buyer owned a joint or undivided interest in the property with the seller before or after the transfer. The beneficiaries had no common ownership with the estate and no evidence of a qualifying bona fide contractual relationship.

Common questions

Did beneficiary status create joint ownership? No.

Was there common ownership before or after sale? No.

Was a refund allowed? No; sales tax was due.

Citations and references

• Tex. Tax Code § 151.306.
• Comptroller Rule 3.331.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9006L1023G02

Original ruling text

June 7, 1990

Dear *****:

Your request for refund of sales tax paid on purchases at an estate

auction (**) was forwarded to me for review.

Section 151.306 of the Texas Tax Code was cited as the basis for tax

exemption on the items purchased at the estate sale. This section

provides an exemption from sales tax on transfers of common interest

in tangible personal property (joint ownership transfers). This means

that the sale of an interest in tangible personal property is exempt

from tax if the transferee, either before or after the transfer, owns

a joint or undivided interest in the property with the transferor.

Enclosed is Rule 3.331 on Joint Ownership Transfers. This rule out

lines the requirements that must be met to establish a tax exempt sale

of an interest in tangible personal property.

The items that you and the other beneficiaries purchased at the estate

sale do not qualify for exemption from sales tax because there was no

common ownership of the property with the transferor before or after

the sale. There is no evidence that a "bona fide contractual

relationship" exists between the estate and the beneficiaries as that

term is construed under the cited sales tax law and rule. Sales tax is

due on the purchases.

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 additional information, you may call

me at 463-4666 or toll free at 1-800-252-5555, extension 3-4666, from

anywhere in Texas.

Sincerely,

Jo Ann Dieck

Tax Correspondence