WAC 247

Definitions.

Tax imposed--Retail sales--Retail car rental.

Consignee, factor, bailee, auctioneer deemed seller.

Trade-ins, selling price, seller's tax measurers. Updated 4/21/01.

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.

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).

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.

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).

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.

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.

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)

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)

SALES TAX – SELLING PRICE -- EXCLUSION -- TRADE-IN PROPERTY OF LIKE KIND – CONSIGNMENT SALES.

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.

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.

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.

RULE 247; RCW 82.08.010(1): TRADE-IN PROPERTY OF LIKE KIND. While video game, video game controller, and video game consoles are interdependent and act as one unit, each of those items functions differently, so they are not in the same nature of the trade-in property and do not have the same function or use of the trade-in property as required under Rule 247. Because video games are not property of the same generic classification as the video game controller or the video game console, they are not “like kind” property under RCW 82.08.010.

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).

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.

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.