Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013

Sales and Use Tax Annotations

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140.0000 BARTER, EXCHANGE, "TRADE-INS"—Regulation 1654

Annotation 140.0040

140.0040 Trade-Ins. Where a retailer advertises that he will sell a new tire for a certain price plus an old tire, the trade-in allowance of the old tire must be established and included in taxable gross receipts. Even if the retailer contends that the trade-in allowance is greater than the value of the item traded in, the trade-in allowance is the amount included in gross receipts for purposes of measuring sales tax.

The trade-in allowance is the difference between the amount charged customers leaving their worn tire and the amount charged other customers, at a similar time, who do not exchange an old tire. For example: Usual price without exchange is $16.00. Advertised sale price where old tire is traded in is $14.00. The taxable trade-in allowance of the old tire is $2.00. 9/11/53; 2/6/91.