[kevkrom]

What exactly does this part of the law mean?

What, specifically, is confusing to you? The general purpose of this section is to define what is considered "used" (really, already-taxed) at the time the NRST becomes operative so that such items are not taxed again.

[Your Nightmare]

The general purpose of this section is to define what is considered "used" (really, already-taxed) at the time the NRST becomes operative so that such items are not taxed again.

I don't believe this is correct. The part I quoted doesn't talk about "used" items, it talks about items in inventory that will be sold as new. It looks to me as if business get a tax credit for all the items in their inventory.