Texas Comptroller of Public Accounts STAR System
9312L1273G03
December 1, 1993
***********
***********
***********
Dear *******:
Thank you for your recent letter which is restated in part with
response below. Our client is a joint venture formed for the purpose
of developing affordable housing in ***********, Texas. There are two
joint venture partners, a non-profit corporation and a for-profit
organization, each owning 50% of the joint venture.
To further the purpose of the non-profit organization, the joint
venture is planning to construct a multi-family apartment complex in
************, Texas that will qualify to receive low income tax credits
pursuant to Section 42 of the Internal Revenue Code. The completed
multi-family property will be owned by a limited partnership, of which
our client will be the sole general partner. The joint venture will be
entering a separated construction contract with a contractor for the
construction of the project.
We are writing to inquire as to your offices' position concerning the
ability of either the joint venture or the non-profit corporation to
purchase the building materials to be incorporated into the project
free of state sales tax.
Note: In our phone conversation of November 23, 1993, you said that
the non-profit partner was designated by the IRC as a 501(c)(3)
organization and that the income to be derived from the rental of the
apartments would be considered as related income by the IRS.
Response: The joint venture may give an exemption certificate for 50%
of the cost of the incorporated materials and consumable supplies used
in the project. The remaining 50% of incorporated materials and
consumable supplies are subject to sales tax. This is the case
regardless of whether the joint venture or the non-profit organization
pays for the materials and consumables.
This opinion is rendered based on the facts you submitted. Other
facts, though similar, may yield different results.
If you have questions or need more information, please call or write.
You may reach me by calling toll free, (800)-531-5441 (ext. 3-4680).
My direct line number is (512) 463-4680. The number for FAX
transmissions is (512) 475-0900. You may write to me in care of Tax
Administration Division.
Sincerely,
Al Van Allen
Tax Administration Division
NOTE: Previous Accession Number 9311115L.4 and/or 9311115L
NOTE: Previous Accession Number(s) 9311115L
ACCESSION NUMBER: 9312L1273G03
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 1993-12-01
TAX TYPE: SALES