In order to reduce the taxable sales price, the trade-in must be the type of item the seller normally sells. For example, a typewriter company that takes a desk as part of the payment for a typewriter must collect sales tax on the retail sales price of the typewriter without any deduction for the value of the desk. In this situation, the desk is a barter, not a trade-in. The taxpayer may claim an exemption from tax on computer hardware, software and printers used by the programmers to code the software. The statute specifically excludes from the exemption property not used in the actual manufacturing, processing or fabrication operation.
Equipment used by technical support personnel and technicians is taxable.
As a manufacturer, the taxpayer may qualify for an exemption from tax on gas or electricity if a predominant-usage study proves that the gas or electricity purchased was used predominately to power equipment used to modify software for sale or to heat or cool the manufacturing area. December I told you about an amendment to Rule 3.300, the rule on manufacturing. Here is a letter on that provision of the manufacturing rule. When equipment that was purchased tax free as manufacturing equipment is used for non-manufacturing purposes, tax is due on the fair market rental value of the equipment for the period of divergent use. To avoid tax payment on the divergent use, a manufacturer may pay tax on the original purchase price of the equipment.