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Appendix 1 Example of Computing Allowable Bad Debt Deduction for a Repossessed Vehicle Using Pr...

18 CA ADC § 1642 App. 1Barclays Official California Code of Regulations

Barclays California Code of Regulations
Title 18. Public Revenues
Division 2. California Department of Tax and Fee Administration-- Business Taxes (State Board of Equalization-- Business Taxes, See Ch. 6 and 9.9)
Chapter 4. Sales and Use Tax (Refs & Annos)
Article 13. Credit Transactions (Refs & Annos)
18 CCR § 1642 App. 1
Appendix 1 Example of Computing Allowable Bad Debt Deduction for a Repossessed Vehicle Using Pro Rata Method
Currentness
I. Step One. Compute the Repossession Loss Per Records
a.
Retail sales price
$12,000
b.
Taxable fees (i.e., doc/smog)
230
c.
Total amount subject to tax
12,230
(a+b)
d.
Sales Tax (6%)
734
(c*.06)
e.
License Fees
240
f.
Other non-taxables
0
g.
Total non-taxable charges
974
(d+e+)
h.
Total sales price
13,204
(c+g)
i.
Down payment
2,000
j.
Balance on contract
11,204
(h-i)
k.
Finance charges/accrued interest
3,000
l.
Total contract value
14,204
(j+k)
m.
Payments received on contract
2,100
n.
Balance on date of repossession
12,104
(l-m)
o.
Unearned finance charges
2,750
p.
Net contract balance
9,354
(n-o)
q.
Value of repossession
6,000
r.
Repossession loss per records
$ 3,354
II. Step Two. Compute the Taxable Percentage of Loss.
This is done by dividing the total amount subject to tax (line c) by the total sales price (line h).
12,230 / 13,204 = 92.62%.
III. Step Three. Compute the Allowable Deduction.
This is done by multiplying the taxable percentage of loss (step Two) by the repossession loss per records (step One).
92.62% * 3,354 = $3,106.47
This database is current through 5/10/24 Register 2024, No. 19.
Cal. Admin. Code tit. 18, § 1642 App. 1, 18 CA ADC § 1642 App. 1
End of Document