If I want to transfer a motor vehicle from my personal name into my business or vice versa, will sales tax be due on the transfer?

It depends on the circumstances of the situation. Transfers of vehicles from an individual owner’s name to the name of their sole proprietorship are not subject to Tennessee tax.  The same is true when the vehicle is transferred from the sole proprietorship to the individual owner.

If a sole proprietor changes their business structure to corporation, the transfer of automobiles is exempt from sales tax.

Transfers of vehicles between a partner and the partnership are subject to tax. However, a transfer of a vehicle to a partner caused by the automatic dissolution of a partnership of three or more partners are not subject to tax.

Additionally, if an individual forms a single member LLC and transfers the vehicles to the single member LLC, the transfer is also not subject to Tennessee tax if the individual is the sole member of the LLC (a “single-member LLC”). If the individual is not the sole member of the LLC, the transfer is subject to sales tax.

Transfers of automobiles between members and an existing LLC are subject to sales and use tax, unless the LLC is a single-member LLC and is disregarded as a separate entity for federal tax purposes.

 

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