Ezel / Tax Rulings / TX
TX 8904L0934G11 Sales and/or Use Tax (State,Local,MTA) 1989-04-25

Was a sale of oil leases and the basic production equipment then in use subject to Texas sales tax?

Short answer: No. Texas treated the leases and in-use basic production equipment as an interest in real property, so no part of the sale was taxable.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

Texas treated the sale of oil leases together with the basic production equipment in use at the time of sale as a transfer of an interest in real property.

On those facts, no part of the sale was subject to sales tax.

Common questions

Were the oil leases taxable? No.

What equipment did the answer include? Basic production equipment in use when the leases were sold.

Does the letter decide a separate sale of unused equipment? No.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

April 25, 1989

Dear *:

I just want to take a minute to acknowledge your question on the
sale of oil leases and related equipment.

The sale of oil leases and basic production equipment in use at
the time of the sale represent the sale of an interest in real
property. No part of the sale would be subject to sales tax.

Feel free to call or write me if you have questions. You can
reach me by calling toll free 800-531-5441 or FAX (512) 475-0900.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division

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