For purposes of motor vehicle tax, Limited Liability Companies (LLCs) are treated the same as corporations. When reading this text, the term "corporation" also includes an LLC.
A corporation may own property, engage in business and be held liable for its debts as a legal entity separate and apart from its stockholders. Corporate stock may be bought and sold without affecting the tax status of a motor vehicle titled in the corporate name. When a corporation acquires or sells a motor vehicle, however, motor vehicle tax is due.
When an individual stockholder in a corporation transfers a motor vehicle from his or her name to the corporate name or the corporation transfers a motor vehicle to the stockholder, the following guidelines apply:
A motor vehicle transfer between a shareholder and a subchapter S corporation or between a member and a single member LLC is taxable.
Transfers between an individual and an unincorporated company owned solely by that individual are treated differently. See Business Entities – Sole Owners in this guide.
Exception: See Incorporation of a Partnership or a Sole Ownership on this page.
When a parent corporation transfers a motor vehicle to a subsidiary corporation or a subsidiary corporation transfers a motor vehicle to its parent corporation, the following guidelines apply:
Exception: See Transfer from Existing Corporation to Newly Formed Subsidiary Corporation on this page.
When a subsidiary of a corporation transfers a motor vehicle to another subsidiary of the corporation, the following guidelines apply:
When a sole owner or partnership incorporates and transfers a motor vehicle from the individual or partnership to the corporation in connection with that incorporation, the following guidelines apply:
When an existing corporation transfers a motor vehicle to a subsidiary corporation upon the initial incorporation of the subsidiary, the following guidelines apply:
When a corporation transfers a motor vehicle to a stockholder upon dissolution/termination of the corporation, the following guidelines apply:
When two or more corporations merge, no tax is due on motor vehicles transferred to the surviving corporation. Also, when a corporation is divided into two or more new corporations, or into a surviving corporation and one or more new corporations, no tax is due on the transfer of motor vehicles. Similarly, when a corporation converts to a different entity type, no tax is due on motor vehicles transferred to the resulting entity following the conversion. In a merger or conversion, which is an operation of law, transfer of liens with motor vehicles does not constitute "consideration" since the merger or conversion is not a sale by statute; therefore, no taxable event has occurred. Evidence of merger or conversion is a Certificate of Merger or Conversion issued by the Texas Secretary of State (SOS).
If a corporation changes its registered name, it may change its name on a certificate of title without owing motor vehicle tax. Evidence of a corporate name change may include a Certificate of Amendment filed with the Texas SOS.
With the exception of a merger or conversion, any motor vehicle transfer involving the assumption of a lien is subject to motor vehicle tax. SPV procedures may apply.
Tax Code Section 151.304, Occasional Sale provides for the sale of the entire operating assets of a business to be exempt from limited sales and use tax as an occasional sale. Motor vehicle tax law does not provide for an occasional sale exemption. The purchaser owes motor vehicle sales tax on the transfer of each motor vehicle. SPV procedures may apply.
When a corporation enters Texas to establish residency and begins doing business for the first time, the corporation is considered a new resident. The following guidelines apply:
A corporation that is presently doing business in Texas or is domiciled in Texas is not a new resident for Texas motor vehicle tax purposes.
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