029.01 When property is sold and part of the selling price is resolved through the purchaser trading in a used item that is similar to the item being sold, the retailer must collect and remit sales tax on the difference between the total selling price and the amount allowed on the trade-in.
029.01A Making payment with an item that is not similar to the item being purchased or is a commodity regularly traded on an open market is a taxable barter and not a trade-in.
029.01B See Reg-1-020, Motor Vehicles, for exchanges of motor vehicles and trailers between individuals.
029.02 If the trade-in allowance exceeds the value at which the property traded in is later carried for inventory purposes, the excess allowance is a form of consideration and is not an allowable cash discount on a subsequent sales tax return.
029.03 Under the foregoing, the full selling price shall be included in "gross sales and services" and the agreed value of the article taken in trade deducted to arrive at "net taxable sales".
029.04 If the property taken in trade is not to be resold in the retailer's regular course of business, he or she must collect and remit the tax on the difference between the total selling price and the amount allowed on the trade-in. In addition, the retailer must pay the use tax on the amount allowed on the trade-in for using the item. (Reg-1-035, Consumption of Untaxed Property.)
(Sections 77-2702.07, and 77-2702.17, R.S.Supp., 1993. May 14, 1994.)