Ezel / Tax Rulings / TX
TX 9105L1144C05 Motor Vehicle Tax 1991-05-22

Is Texas motor vehicle tax due when a dissolving corporation distributes a vehicle to a stockholder as part of the stockholder's liquidation share?

Short answer: No tax was due when a dissolving corporation transferred a vehicle to a stockholder as part of the stockholder's liquidation share, provided there was no consideration or lien assumption. The letter's separate $10 subsidiary-to-parent gift result was superseded in 2009.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
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Disclaimer: This official Texas Comptroller letter is PARTIALLY SUPERSEDED. STAR states that House Bill 2654, effective September 1, 2009, changed gift tax and points to Rule 3.80, so the letter's $10 subsidiary-to-parent result is obsolete. The no-consideration liquidation distribution is summarized as historical guidance and should still be checked against current corporate and motor vehicle tax law. The letter predates modern Private Letter Ruling reliance terms and cannot be relied on by unrelated taxpayers. 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 Texas Comptroller ruled that a dissolving corporation could transfer a motor vehicle to a stockholder without motor vehicle tax when the vehicle was part of that stockholder's share of the corporation's assets and no consideration or lien assumption was involved.

The same letter originally said a no-consideration transfer from a subsidiary to its parent owed $10 gift tax. STAR expressly marks that gift-tax item superseded after House Bill 2654 restricted qualifying motor vehicle gifts.

What this means for you

Dissolving corporations and stockholders

Document the dissolution, the stockholder's distributive share, and the absence of cash, debt assumption, or other consideration. Different facts may create a taxable transfer.

Parent and subsidiary corporations

Do not use the old $10 gift result. Current Rule 3.80 and Chapter 152 must be applied.

Common questions

Q: What facts supported no tax on dissolution?

A: The vehicle was distributed as the stockholder's share of liquidation assets, with no consideration and no lien assumption.

Q: Is the subsidiary-to-parent $10 gift rule current?

A: No. STAR marks the gift-tax issue superseded.

Citations and references

  • 34 Tex. Admin. Code Rule 3.80
  • Texas House Bill 2654, 81st Legislature (effective September 1, 2009)

Source

Original ruling text

STAR SUPERSEDED INFORMATION
Accession No. -

Supersede type - partial
Document superseded on - 2/22/2013
Issue(s) that caused the document to be superseded -gift tax
Reason(s): House Bill 2654, 81st Regular Legislative Session amended Texas Tax Code Section 152
to limit the motor vehicle gift tax to a limited group of individuals or entities. (Effective Sept. 1, 2009).
See Rule 3.80 (Motor Vehicles Transferred as a Gift or For No Consideration).

May 22, 1991

Dear **:

Your letter dated May 8, 1991, to Mr. Curt Swenson regarding motor
vehicle tax has been referred to me for response.

When a subsidiary corporation transfers a motor vehicle to its parent
corporation and no consideration (including a lien assumption) is paid
for the motor vehicle, the $10 gift tax is due. If, however, a motor
vehicle is transferred to a stockholder upon dissolution of a corporation
for no consideration (and no lien assumption) as a part of the
stockholder's share of the dissolving corporation's assets, no tax is
due.

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

If you have any questions, please don't hesitate to call toll free at
1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division

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