Unbundling Bundled Transactions Note

Authors

Eric Duey

Document Type

Article

Abstract

The distinction between goods and services is common knowledge in most of the United States, as are its effects on the taxation of transactions; goods are taxed, while services and intangibles are not. Less commonly known is how states tax the transfer of items that do not easily fall into either category. This Note explores the historical roots of the bundled transaction dilemma as well as the various legal doctrines employed in an attempt to determine whether a bundled transaction is best characterized as a good or a service for tax purposes. This Note gives particular attention to the "true object test" and its corollaries, which are ultimately found wanting as a solution to the bundled transaction dilemma. Alternative doctrines are explored and critiqued in turn, and this Note ultimately proposes a new approach to determining the taxation of bundled transactions.

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