Form 706-NA online Colorado Springs Colorado 2019-2025

Form 706-NA online Colorado Springs Colorado: What You Should Know

If you are considering a sales tax on the sale of tangible personal property, it's important for you to be able to understand exactly what it means. The sale or transfer of tangible personal property is a taxable transaction, and you must report the amount paid to install, apply, remodel or repair the tangible personal property. The sale or transfer of the tangible personal property is also a taxable transaction for income tax purposes because the sales tax may be calculated as a flat rate equal to the sales price of the tangible personal property. This means that you will need to report, and pay, the applicable sales tax on the sale of the property. What qualifies a purchase or sale of tangible personal property as a taxable transaction for income tax purposes? First, the property must be of such low value that the individual who originally purchases the property from you has to pay the applicable tax. In terms of sale of tangible personal property, the value of the tangible personal property is not the sales price; it is its fair market value, that is, the price at which the property would be sold to the private sector for use in its normal operating and general life-cycle. The purchaser must still purchase the tangible personal property and is considered the owner of the property. So, for example, suppose your husband purchases a new house for 150,000. That would not be considered a sale of property for income tax purposes. The sale of tangible personal property is only reported if the actual sales price of the tangible personal property is equal to or more than one-half of its value at the time of sale to you. The tax is based on the taxable part, not the fair market value of the property. Therefore, even if you purchase the property for 75,000, the fair market value of that property, 65,000, is used to determine the tax you owe. What constitutes the taxable part? The taxable part has to be based on the fair market value of the tangible personal property at the time of the fair market transaction. The fair market value of the property is equal to 60% of the sales price before any deduction or reduction. Example: John purchases a home for 115,000. He includes 3,000 in inventory for sale. The sales price of the home is 145,000. John's taxable sale is the amount he pays for the property after taking into account the inventory, 65,000 (125,000 – 3,000).

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