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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I am trying to figure out California Sales Tax. We run a car

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I am trying to figure out California Sales Tax. We run a car dealership and we sell the cars on a credit sale. We are paying the tax on the full amount of the car in the quarter the car was sold. However when we repossess a car, how do we go back and get those credits? Do we go back and adjust the sale down to the collected amount? That way we are taxed on the actually amount paid by the customer?

Megan C :

Hello and how are you today?

Megan C :

I hope you are doing well.

Megan C :

I found the answer to your question in publication 34, which is the sales tax and use guide for car dealerships

Megan C :

It is accessible, HERE

Megan C :

It states:

Megan C :

if you repossess a vehicle, a deduction can be claimed on your sales and use tax return for the net


taxable loss, provided the amount has been charged off for income tax purposes. The net taxable loss is the loss

after adjustments have been made for the wholesale value of the repossessed vehicle and for other credits, such

as refunded insurance payments and unearned finance charges, and for charges included in the sale that were not

subject to tax

Megan C :

So, yes - you do receive a credit equal to your tax loss on repossessions

Megan C :

Do you have any further questions about this?

Megan C :

This is covered on page 30 of the publication that I linked to.

Megan C :

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Josh,

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