Tennessee Code Title 67. Taxes and Licenses § 67-6-510

(b)(1) A motor vehicle dealer having previously titled and registered a motor vehicle in the dealership name for business use, and having paid the appropriate sales or use tax on such vehicle, shall be allowed a trade-in credit equal to the trade-in value of such vehicle against the purchase price of a new or used vehicle purchased or extracted from such dealer's inventory to be titled and registered as a replacement vehicle for business use, and the sales or use tax shall be paid on the net difference.

(2) The trade-in value authorized by this subsection (b) shall be equal to the trade-in amount for the specific make and model as established by the NADA Official Used Car Guide, Southeastern Edition.

(3) It is the legislative intent that a dealer may purchase a vehicle from the dealer's dealership's inventory and receive the same trade-in credit as if the dealer purchased the vehicle from the inventory of another dealer.