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WAC 247 Trade-ins, selling price, sellers' tax measures.          
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION  
         
WAC: 458-20-247 12/24/09 Trade-ins, selling price, sellers' tax measures
The statutory definitions of “selling price” (RCW 82.08.010) and “value of article used” (RCW 82.12.010) exclude “separately stated trade-in property of like kind” for purposes of the retail sales and use taxes. WAC 458-20-247 (Rule 247) explains how and when this exclusion applies, and the recordkeeping requirements needed to document the transactions.

The Department amended Rule 247 to:

Update language in the rule to more closely follow the current statutory definitions of “selling price” and “value of article used”; and
Update citations to other statutes and rules.
Editing changes were also made for clarity.

 
  458-20-247   01/28/1986 Trade-ins, selling price, seller's tax measurers.Updated 4/21/01.  
           
         
RCW: 82.08.010   1985 Definitions.  
  82.08.020   1992 Tax imposed--Retail sales--Retail car rental.  
  82.08.040   1975 Consignee, factor, bailee, auctioneer deemed seller.  
           
         
ETA:        
  163.04.08.107. 247.250 5/1/90 CORE DEPOSITS AND CREDITS - PARTS RETURNED TO WHOLESALERS Cancelled effective 02/28/07 This document explains the tax treatment of core deposits and credits involving automobile parts such as starters. This subject is fully addressed in WAC 458-20-272 (Tire fee--Core deposits or credits).  
           
         
INDUSTRY GUIDES:        
           
         
SPECIAL NOTICES:        
           
         
DIRECTIVE: NONE        
           
         
RPM: NONE        
           
         
WTD: 1 WTD 235 86-265   RETAILING B&O TAX -- CASUAL OR ISOLATED SALE -- TYPE OF PROPERTY -- PROPERTY OF LIKE KIND -- MOTOR HOME SOLD BY USED CAR DEALER. Sale of a personal motor home independently from the taxpayer's business operation is not taxable.To be taxable, such property must be of the type of property (used cars and trucks) which the taxpayer holds himself out as selling. The sale of the motor home is a casual or isolated sale not subject to business and occupation (B&O) tax. The term "type of property" is distinguished from the term "property of like kind" used in Rule 247, which allows trade-in tax benefit where motor home is traded in for auto. Type of property is more restrictive and specific in scope.  
  5 WTD 173 88-154   USE TAX -- TRADE-IN -- NONRESIDENT. A non-resident who purchases property in another state and trades in an item of like kind property is entitled to benefit from the trade-in exclusion if the Washington use tax applies to item. See Simpson v. State, 26 Wn. App. 687, 615 P.2d 1297 (1980).  
  6 WTD 305 88-322   RETAIL SALES TAX -- DEDUCTION -- TRADE-IN PROPERTY -- PROPERTY OF LIKE KIND -- WHAT QUALIFIES. In order to qualify as "property of like kind" so as to be deducted from the selling price on which retail sales tax is calculated, the property traded in must be of the same general class as that purchased. The trade-in of a tractor and trailer, vehicles intended for road use, on construction equipment is not a trade-in of property of like kind so as to qualify under the rule. Thus the value of the property traded in is not properly deducted from the selling price in order to calculate the retail sales tax due.  
  7 WTD 189 89-107   SALES TAX -- SELLING PRICE -- AUTOMOBILE REBATE. A manufacturer's automobile rebate endorsed by a customer in favor of a dealer, as part of the consideration for the purchase of an automobile, is part of the selling price of the auto and is subject to retail sales tax.  
  10 WTD 395 91-044   LIKE-KIND EXCHANGE -- COMPUTER SYSTEMS -- SOFTWARE FOR HARDWARE. In order to qualify for a like-kind exchange under Rule 247, the property traded must be of the same general category. Computer software and hardware are not of the same general class and do not qualify for that treatment.Accord: Det. 88-322; 6 WTD 305 (1988).  
  12 WTD 451 92-277   TRADE-IN -- LIKE-KIND EXCHANGE -- LEASE. User of chassis qualifies as lessee where user's right to use the chassis is conditioned on user's promise to permit the chassis owner to use owner's chassis under similar circumstances. User's promise to permit reciprocal use constitutes "consideration," which, coupled with user's dominion and control," which, coupled with user's dominion and control over the property, creates a lease under Rule 211. Owner's reciprocal use of user's property constitutes a trade-in of like kind property.  
  13 WTD 63 92-044R   DEMONSTRATORS -- TRADE-IN DEDUCTION. A use tax trade-in deduction is properly available under WAC 458-20-247 if a taxpayer actually trades used demonstrators into inventory for newer demonstrators out of inventory, and therefore actually transfers its used demonstrators back into inventory before their ultimate sale.Trade-ins will not be imputed for purposes of the trade-in deduction, however, in those instances in which the taxpayer simply sells demonstrators to customers and brings newer demonstrators out of inventory to replace them.  
  17 WTD 170 97-228   SALES TAX -- DEDUCTION -- TRADE-IN PROPERTY -- CONSIGNMENT SALES.Where a dealer holds a boat on consignment for sale, sells that boat, and accepts a trade-in boat at the time of the sale for its own account, the sales tax deduction for trade-ins will be disallowed. In order for that deduction to apply, the party selling the boat and the party accepting the trade-in must be the same.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 99-005R, 19 WTD 223 (2000)
 
  17 WTD 375 98-070   RETAIL SALES TAX -- SELLING PRICE -- EXEMPTION FOR TRADE-IN PROPERTY -- The measure of retail sales tax owing on a new leased vehicle may not be reduced by the difference between the residual amount due on a used leased vehicle and its trade-in value if the lessee is trading in the used leased vehicle as a lessee and not as the owner of it.  
  19 WTD 223 99-005R   SALES TAX – SELLING PRICE -- EXCLUSION -- TRADE-IN PROPERTY OF LIKE KIND – CONSIGNMENT SALES.A consignee may exclude from the retail sales tax the value of a vehicle traded-in by a purchaser of a consigned vehicle provided the traded-in vehicle was delivered as consideration for the purchase of the consigned vehicle.In other words, the seller must actually accept ownership of the trade-in property and reduce the price of the purchased property at the time of sale by the value of the trade-in property.Because the definition of “seller” for purposes of the retail sales tax includes an agent or consignee, a consignee can qualify as a seller for retail sales tax purposes.OVERRULING DET. NO. 97-228, 17 WTD 170 (1980).  
  20 WTD 394 00-203   RETAIL SALES TAX – SELLING PRICE – LIKE-KIND TRADE-IN EXCLUSION – CONSIGNMENT.In order for the like-kind trade-in exclusion in RCW 82.08.010(1) and Rule 247 to apply, both requirements set out in Det. No. 99-005, 19 WTD 223 (2000) must be met.That is, the seller or the seller’s agent must actually accept ownership of the trade-in property, and must actually reduce the price of the property it is selling to the person trading in property, at the time of sale, by the value of the trade-in property.When seller S’s consignee sells buyer B’s “trade-in” on consignment before it completes the sale of S’s property to B, the exclusion does not apply.Although the two sales transactions are related, neither S nor S’s consignee accepts ownership of the “trade-in.”  
  20 WTD 394 00-203   RETAIL SALES TAX – SELLING PRICE – LIKE-KIND TRADE-IN EXCLUSION – CONSIGNMENT.In order for the like-kind trade-in exclusion in RCW 82.08.010(1) and Rule 247 to apply, both requirements set out in Det. No. 99-005, 19 WTD 223 (2000) must be met.That is, the seller or the seller’s agent must actually accept ownership of the trade-in property, and must actually reduce the price of the property it is selling to the person trading in property, at the time of sale, by the value of the trade-in property.When the facts show seller S’s consignee did not actually accept ownership of buyer B’s “trade-in” property, despite the exchange of a piece of paper labeled “bill of sale,” and required B to pay the full sales price of S’s property at the time of the sale to B, despite labeling part of B’s payment a “loan” to the consignee, the exclusion does not apply.  
  23 WTD 238 03-0045   RETAIL SALES TAX – LIKE KIND TRADE-IN EXCLUSION.In order for the like kind trade-in exclusion to apply, the seller must accept ownership of the trade-in property, and must actually reduce the price of the property it is selling to the person trading in the property.The like kind trade in exclusion does not apply where a taxpayer sells property to one person and then buys like kind property from a different person.  
           
         
OTHER: