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BTLG Table of Contents > Sales and Use Tax Annotations > B > 140.0000 Barter, Exchange, "Trade-ins" > Annotation 140.0026

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B

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140.0000 Barter, Exchange, "Trade-Ins"—Regulation 1654

Annotation 140.0026

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140.0026 Rebate from Manufacturer—Trade-In. A retailer purchases a product from a distributor for $29,000 for resale and sells it to a customer for $28,000 less a cash discount of $2,800 for a net sale price of $25,200. The retailer charges sales tax to customer based upon the net sales price of $25,200. The customer's old product, which is taken by the retailer upon the sale of the new product to the customer, is sent to the manufacturer for a rebate of $5,000 to the retailer.

In this transaction, the customer has contracted to pay a certain sum of money plus transfer the old product as consideration for acquiring the new product. Taxable gross receipts from this sale includes the fair market value of the old product, which is $5,000. That amount must be included in the retailer's taxable gross receipts. Thus, the correct measure of tax is $30,200; $25,200 cash price plus $5,000 trade-in. 9/20/94.