Valuation of Business Inventory

All inventory held for resale in the State of Texas is subject to a business personal property tax and must be reported on the yearly rendition form.

Sec. 23.12 (a) of the Texas State Property Tax Code states that the market value or assessed value of inventory “is the price for which it would sell as a unit to a purchaser who would continue the business.” Proving this point to the appraisal district can be difficult.

Sec 23.12 (b) further states “The chief appraiser shall establish procedures for the equitable and uniform appraisal of inventory for taxation. In conjuction with the establishment of the procedures, the chief appraiser shall:

1) establish, publish, and adhere to one procedure for the determination of the quantity of property held in inventory without regard to the kind, nature, or character of the property comprising the inventory; and

2) apply the same enforcement, verification, and audit procedures, techniques, and criteria to the discovery, physical examination, or quantification of all inventories without regard to the kind, nature, or character of the property comprising the inventory.”