Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 236.1010

236.1010 Sale of Assets. A corporation engaged in the retail sale of computers and related items sold all of its business assets effective May 31, 1987, but failed to report or pay tax on the sale of assets. The corporation objects to the application of tax on the basis that the purchaser filed under Chapter 11 of the Bankruptcy Act on January 11, 1989, making it doubtful whether all of the consideration due under the contract of sale will be received.

Tax on the sale of the assets should have been reported and paid with the corporation's return which was due on or before July 31, 1987. This means that payment of the tax should have been made before the purchaser filed for protection under Chapter 11. The corporation is entitled to relief only after the amount claimed as a bad debt is written off for income tax purposes. When the corporation writes off any amount as a loss on this transaction, the corporation will be entitled to a credit or refund at the time the write-off is made. 5/18/90.