Two aircraft were swapped in back-to-back sales a day apart -- Company A sold a Beechcraft King Air to Company B, and the next day Company B sold an IAI Westwind 1124 to Company A. Does the occasional sale exemption apply to these transactions, and does it matter that Company B holds an active Texas sales tax permit?

Plain-English summary

Two companies swapped aircraft a day apart: Company A sold a Beechcraft King Air to Company B on August 5, 1999, and Company B sold an IAI Westwind 1124 back to Company A the very next day. The taxpayer asked whether sales tax was due, or whether the occasional sale exemption covered the exchange.

The Comptroller's key point: this was not one combined transaction — it's two separate sales, each taxed or exempted on its own merits.

For the King Air sale, Company A's sale may qualify as an exempt occasional sale under Sec. 151.304(b)(1), but only if Company A doesn't hold (and isn't required to hold) a Texas sales tax permit, and didn't make more than two other sales of tangible personal property in the past twelve months. But there's a catch on the buyer's side: Company B holds an active Texas sales tax permit, and Sec. 151.304(g) requires a permitted purchaser to accrue and pay use tax to the Comptroller on a purchase that qualifies as an occasional sale — so even if the seller's side of the deal is exempt, the permitted buyer still owes the tax.

For the Westwind sale the next day, Company B (now the seller) is making a taxable sale unless Company A gives Company B a valid exemption or resale certificate.

What this means for you

Permitted retailers buying tangible personal property (including aircraft)

Holding a Texas sales tax permit as a retailer doesn't let you skip tax on your own purchases just because the seller's sale qualifies as an occasional sale exemption. Under Sec. 151.304(g), a permitted purchaser must self-accrue and pay use tax on an occasional-sale purchase.

Businesses trading assets back and forth in near-simultaneous transactions

Don't assume a same-week or back-to-back swap is treated as one netted transaction — each sale is analyzed and taxed separately on its own facts (occasional sale status, permit status, exemption/resale certificates).

Accountants and tax professionals

A clean illustration of how the occasional sale exemption (Sec. 151.304(b)(1)) and the permitted-purchaser accrual rule (Sec. 151.304(g)) can both apply to the same transaction from opposite sides — the seller may qualify for the exemption while the buyer still owes use tax because of its own permit status.

Common questions

Q: If two companies swap aircraft a day apart, is that treated as one transaction for sales tax purposes?
A: No — each sale is a separate transaction, taxed or exempted independently.

Q: Does a seller without a sales tax permit and few other sales qualify for the occasional sale exemption?
A: Possibly, under Sec. 151.304(b)(1), if they don't hold or need a permit and made no more than two other TPP sales in the past 12 months.

Q: If the buyer holds an active sales tax permit, does the seller's occasional-sale exemption let the buyer skip tax too?
A: No. Sec. 151.304(g) requires a permitted purchaser to accrue and pay use tax on the purchase even when the sale otherwise qualifies as an occasional sale.

Q: Can I rely on this letter for my own aircraft transaction?
A: No. It's based on the specific facts presented and can be relied on only by the taxpayer to whom it was issued; other facts, even if similar, may produce a different result.

Citations and references

Statutes and rules:

• Texas Tax Code Section 151.304(b)(1) (occasional sale exemption)
• Texas Tax Code Section 151.304(g) (permit holder must accrue and pay tax on an occasional-sale purchase)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9909661L

Original ruling text

September 3, 1999

Dear Ms. **:

Thank you for your recent letter concerning the taxability of recent sales of
an aircraft by COMPANY A and COMPANY B d.b.a. AVIATION COMPANY.

You attached a copy of the Aircraft Bills of Sale for each aircraft. COMPANY A
sold the Beechcraft King Air on August 5, 1999, to COMPANY B for
$**. On August 6, 1999, COMPANY B sold the IAI Westwind 1124 to
COMPANY A.

Question: Is sales tax due on this transaction or does the occasional sale
exemption apply?

Answer: This was not a single transaction. There are two separate transactions.
Each transaction is either taxed or exempted on its own merit under the Tax
Code.

The sale of the Beechcraft King Air may qualify as an occasional sale under
Texas Tax Code Section 151.304(b)(1) provided COMPANY A does not hold or is not
required to hold a permit issued under Texas Tax Code Chapter 151 and did not
make two other sales of tangible personal property in the past twelve months.
Our records show that COMPANY B holds an active sales tax permit. Texas Tax
Code Section 151.304(g) requires COMPANY B to accrue and pay sales tax to the
comptroller on the purchase of the aircraft under a transaction qualifying as
an occasional sale under Texas Tax Code Section 151.304(b)(1).

COMPANY B's sale of the IAI Westwind 1124 to COMPANY A is also taxable unless
COMPANY A issues either a valid exemption or resale certificate in lieu of
paying the sales tax.

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

You may call me toll free 1-800-531-5441, extension 3-4683, if you have any
questions or need more information. My direct line is 512/463-4683. You may
also write to the Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Policy Division

cc: Letitia "Letty" Slavich, ** Enforcement Office