Article 13. Credit Transactions
California Code of Regulations, Title 18 — Division 2. California Department of Tax and Fee Administration — Business Taxes · 2026 edition · updated 2026-10-05 · California
Appendix 1 Example of Computing Allowable Bad Debt Deduction for a Repossessed Vehicle…¶
I. Step One. Compute the Repossession Loss Per Records
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a.
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Retail sales price
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$12,000
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b.
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Taxable fees (i.e., doc/smog)
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230
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c.
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Total amount subject to tax
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12,230
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(a+b)
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d.
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Sales Tax (6%)
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734
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(c*.06)
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e.
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License Fees
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240
| | | | |
f.
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Other non-taxables
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0
| | | | |
g.
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Total non-taxable charges
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974
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(d+e+)
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h.
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Total sales price
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13,204
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(c+g)
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i.
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Down payment
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2,000
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j.
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Balance on contract
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11,204
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(h-i)
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k.
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Finance charges/accrued interest
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3,000
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l.
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Total contract value
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14,204
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(j+k)
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m.
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Payments received on contract
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2,100
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n.
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Balance on date of repossession
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12,104
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(l-m)
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o.
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Unearned finance charges
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2,750
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p.
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Net contract balance
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9,354
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(n-o)
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q.
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Value of repossession
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6,000
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r.
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Repossession loss per records
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$ 3,354
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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
Appendix 2 Consolidation of Allowable Bad Debt Deduction for Multiple Repossessed…¶
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(A)
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(B)
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(C)
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(D)
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(E)
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(F)
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(G)
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(H)
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(I)
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(J)
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(K)
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(L)
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(M)
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(N)
| | | | | | | | | | | | | | |
Date of Repossession
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Car #
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Sales Price of MdseA
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Sales Tax (6%)
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License Fee
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Insurance (Net)B
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Total Sales Price
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Down Payment
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Balance to Finance
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Finance Charges (Net)C
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Net Contract Balance
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Payments
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Value of Repossession
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Repossession Loss Per Records
| | | |
[C*.06]
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[C...F]
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[G-H]
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[I+J]
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[K-L-M]
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09-30-00
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507
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$ 9,000
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$ 540
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$160
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$200
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$ 9,900
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$2,000
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$ 7,900
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$ 400
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$ 8,300
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$1,900
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$ 5,000
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$1,400
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10-27-00
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521
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8,000
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480
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140
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160
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8,780
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1,700
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7,080
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350
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7,430
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1,650
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4,400
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1,380
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11-04-00
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540
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6,000
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360
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110
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120
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6,590
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1,300
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5,290
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260
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5,550
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1,250
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3,300
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1,000
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12-09-00
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575
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5,000
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300
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90
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100
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5,490
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1,100
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4,390
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200
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4,590
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1,000
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2,700
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890
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Totals
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$28,000
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$1,680
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$500
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$580
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$30,760
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$6,100
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$24,660
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$1,210
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$25,870
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$5,800
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$15,400
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$4,670
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(1)
| | | |
(2)
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(3)
| | | | | | | | | | | | | | |
[Computation of the Taxable Percentage of Loss:
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$28,000(1) = 91.03%
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$30,760(2)
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Computation of Allowable Deduction:
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91.03% x $4,670(3) = $4,251]
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A Includes taxable amounts, such as doc and smog fees.
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B Original insurance charge less rebate of unearned premium.
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C Total finance charges per contract less unearned charges.
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