Ezel / Tax Rulings / TX
TX 9507L1361C01 Sales and/or Use Tax (State,Local,MTA) 1995-07-18

Is the sale of a 'seat option' — the right to later buy a season ticket for a specific seat in a stadium being built — subject to Texas sales tax?

Short answer: No. The Comptroller held that a seat option is not tangible personal property and does not itself provide admission to any amusement service — it only gives the holder the right to later buy a season ticket for a specific seat in a stadium to be built, without reducing what the holder pays for that season ticket. Because it is neither taxable tangible personal property nor a taxable admission, the sale of a seat option is not subject to sales tax.

Apply this to your situation

This page answers the general question as of 1995. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1995
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A taxpayer wrote to the Texas Comptroller's Tax Administration Division asking how sales tax applies to the sale of "seat options" for a stadium that had not yet been built. A seat option gives its holder the right to later buy a season ticket to occupy a specific seat in the stadium once it is built. The option itself does not provide admission to any games, and it does not reduce the price the holder must later pay for the season ticket — it is purely a right to purchase a particular seat's season ticket in the future.

The Comptroller concluded that seat options are not tangible personal property, and because they don't by themselves grant admission to any amusement service, they don't fall under the sales tax that applies to amusement services either. As a result, the sale of a seat option is not subject to sales tax. The letter notes this opinion was based on the facts submitted and that other, even similar, facts could produce a different result.

What this means for you

Stadium operators, sports teams, and venue developers selling seat options

If you sell a right to purchase future season tickets for a specific seat — separate from selling the season ticket itself — that sale can be treated as a nontaxable sale of an intangible right, not a taxable sale of tangible personal property or a taxable admission charge. The season ticket itself, when eventually sold, would be evaluated separately.

Accountants and tax professionals advising venue clients

The key distinguishing facts in this ruling are that the seat option (1) is not tangible personal property, (2) does not itself admit the holder to any event, and (3) does not reduce the price of the season ticket later purchased. If your client's product varies from these facts — for example, if the "option" fee is credited against the ticket price, or if it grants any access to the venue — the analysis in this letter may not extend to it, since the Comptroller expressly limited the ruling to the facts presented.

Common questions

Q: Is a stadium seat option the same as a ticket or admission?
A: No. The letter states the seat option "does not provide admission to any games in the stadium." It's only the right to later buy a season ticket for a specific seat.

Q: Does the seat option reduce what the holder pays for the season ticket later?
A: No. The ruling specifies the seat option "does not reduce the amount that the holder must pay for the season tickets."

Q: Why isn't the sale of a seat option taxable in Texas?
A: The Comptroller found seat options are not tangible personal property and do not themselves provide admission to an amusement service, so they don't fit either basis for sales tax to apply.

Q: Does this ruling guarantee the same result for any similar "option" arrangement?
A: No. The letter explicitly states the opinion is "rendered based on the facts you submitted" and that "other facts, though similar, may yield different results."

Citations and references

No statutes, rules, or cases were cited in the letter.

Source

Original ruling text

July 18, 1995

Gentlemen:

Thank you for your recent letter regarding the tax treatment of the
sale of seat options.

The purchase of a seat option gives the option holder the right to buy
a season ticket to occupy a specific seat in a stadium to be built. The
seat option does not provide admission to any games in the stadium
and does not reduce the amount that the holder must pay for the
season tickets.

The seat options are not tangible personal property, and do not in
and of themselves provide admission to any amusement services
mentioned in your fact situation. Accordingly, sales of the seat
options are not subject to sales tax.

This opinion is rendered based on the facts you submitted. Other
facts, though similar, may yield different results.

You may call me toll free at 1-800-531-5441, ext. 3-4680. The
direct line is 512/463-4680. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 9507393L

Get today's answer for your situation

You just read a 1995 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.