The amount of tax to be collected on a trade-in depends on whether the trade is being applied to a like-item purchase or not.  For example, taking a ring trade-in against the purchase of a new ring as opposed to taking a trade-in of a watch against the purchase of a diamond necklace.  

NOTE: The information provided here is general guidance, please consult the state Department of Revenue or a tax professional for more specifics.

You must have the system option Item Tax - Treat As Single Sale set to True to correctly process trade-ins.

Like-Item Trade/Purchase

To correctly tax a purchase with a like-item trade, you must limit the sales transaction only to the item purchase and applicable trades.  You cannot mix it with other transaction types or purchases.  Multiple trades can be taken against a single like-item purchase so long as all items involved qualify.

To process this at POS:

1. Ensure you have the system option Item Tax - Treat as Single Sale set to True.
2. Go to POS and put the purchase on the transaction.
3. Add one or more applicable trades.
4. For each trade-in, make sure its Pre-Tax box is checked.
5. In the lower right, click the Sales Tax drop-down and check Tax entire sales as if it was one single item.
6. Finish the sale.
   

Non-Like-Item Trade/Purchase