Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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130.0000 BAD DEBTS—Regulation 1642

Annotation 130.0215

130.0215 Property Subject to Foreclosure Sold by Debtor. A taxpayer sold property on a conditional sale agreement. Tax was reported and paid on the sale. Subsequently, the buyer became unable to make payments. With the taxpayer's agreement, the buyer transferred the property to a new entity subject to the taxpayer's security interest. The sale by the buyer to the new entity was an exempt occasional sale. The new entity encountered financial difficulties and became delinquent in its payments to the taxpayer. The taxpayer repossessed the equipment.

The transfer from the buyer to the new entity did not change the status of the taxpayer as the retailer who paid the tax to the state on the original sales price. Accordingly, the taxpayer is entitled to claim a repossession loss in accordance with the regulation. 5/15/75.