Casual sale exemption

Definition

Sales tax on the assets themselves, which some states charge and some call casual.

Why It Matters

A buyer models the price, the fee and the working capital, and then a state asks for tax on the equipment it just bought. Whether it is owed turns on a rule with the opposite answer in the two states read. Ohio exempts casual sales by a person. Washington charges the retail sales tax on a casual or isolated sale where the seller is engaged in business and registered, which nearly every seller is, and then exempts a transfer made by adjusting the beneficial interest in the business. That last clause is the asset-versus-equity decision arriving in a line nobody put in the model. Ask which the state does before the letter of intent fixes the structure, because the answer moves real money and is not negotiable afterward.

In numbers: A $4,000,000 asset purchase with $1,200,000 allocated to equipment carries about $96,000 of tax at an 8% rate, and nothing at all in a state that treats the sale as casual.