34 Tex. Admin. Code § 3.64 - Motor Vehicle Transferred on Incorporation
(a) Except as provided in subsection (b) of
this section, motor vehicle sales and use tax is due upon the transfer of title
to a motor vehicle between corporations or between a corporation and an
individual or a partnership. Taxable transfers include those between parent and
subsidiary corporations, and the purchase by one corporation of the entire
assets, including motor vehicles, of another corporation.
(b) The following are exceptions to the
principle stated in subsection (a) of this section.
(1) Initial incorporation-change in form of
doing business. Motor vehicle sales and use tax is not due if, in connection
with the incorporation of a partnership or sole proprietorship, title to a
motor vehicle is transferred from the partnership or proprietorship into the
new corporation's name for no consideration other than stock in the new
corporation.
(2) Formation of a
subsidiary corporation. Motor vehicle sales and use tax is not due if, in
connection with the initial incorporation of a subsidiary, title to a motor
vehicle is transferred from the parent corporation or another subsidiary
corporation into the name of the new subsidiary for no consideration other than
stock in the new corporation.
(3)
Dividend. Under present law, a corporation may declare a dividend in the form
of cash or other property. Motor vehicle sales and use tax is not due on the
transfer to a shareholder of title to a motor vehicle pursuant to a
corporation's formal declaration of the motor vehicle as a dividend.
(4) Dissolution. Motor vehicle sales and use
tax is not due upon the transfer of title to a motor vehicle into a
shareholder's name in connection with the distribution of assets upon formal
dissolution of a corporation. However, for purposes of this rule, forfeiture of
a corporate charter for nonpayment of franchise taxes does not constitute
formal dissolution; therefore, all transfers of motor vehicles to shareholders
upon forfeiture of the corporate charter will be subject to the motor vehicle
sales and use tax.
(5) Merger or
consolidation. Motor vehicle sales and use tax is not due upon the transfer of
title to a motor vehicle into the name of a surviving corporation when such
transfer is made pursuant to a statutory merger or consolidation of two or more
corporations.
Notes
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