Ezel / Tax Rulings / TX
TX 8707L0831D02 Sales and/or Use Tax (State,Local,MTA) 1987-07-07

Would the company's revised pattern-equipment ownership agreement establish that it sold a pattern to its customer?

Short answer: Yes, if the agreement was properly executed before the sales invoice and the pattern received the accounting treatment described in the Comptroller's earlier March 16 letter.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This 1987 Texas Comptroller letter conditionally approved one company's revised pattern-equipment ownership agreement. One condition incorporates accounting treatment from a March 16 letter that is not included in this STAR record, so this document alone does not state every required accounting step. Verify current law and documentation requirements. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The company submitted a revised “pattern equipment ownership agreement.” The Comptroller said the document would be sufficient written evidence that the company sold the pattern to the customer if two conditions were met.

First, the agreement had to be properly executed before the sales invoice was issued. Second, the company had to use the accounting treatment described in an earlier March 16 letter.

The Comptroller also pointed out a layout problem in the form: the customer's representative-name-and-title field appeared under the company's side and should be corrected before printing.

What this means for you

The written agreement was not approved on a stand-alone or after-the-fact basis. Its timing and the company's accounting treatment were both part of the conclusion. Because the incorporated March 16 guidance is absent from this record, the complete accounting instructions cannot be recovered from this letter alone.

Common questions

Did the Comptroller approve the revised agreement? Yes, conditionally.

When did it have to be signed? Before issuance of the sales invoice.

Was signing alone enough? No. The pattern also had to receive the accounting treatment described in the March 16 letter.

Does this record reproduce that accounting treatment? No.

Citations and references

  • No statute or rule number is cited in the ruling text.
  • The letter incorporates a March 16 letter's accounting treatment, but that earlier letter is not included in this STAR record.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

July 7, 1987

Dear **:

Thank you for your recent letter and your revised "pattern equipment
ownership agreement."

This document will be sufficient to constitute a written agreement
showing a
sale by your company of the pattern to the customer if:

  • It is properly executed before issuance of the sales invoice, and
  • The accounting treatment of the pattern is as outlined in my March
    16 letter.

I would note in passing that "Representative's Name & Title" for the
customer's side of the document is lined up under **'s side. You may
want
to correct this prior to having the agreement printed up.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Sandi Skaggs
Tax Policy Section
Tax Administration Division

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