Partnership set up

[Jim]

I've been studying AOPA's sample copy of a co-ownership agreement and have a
couple questions to those who are involved in co-ownerships.

How do you treat the one time initial expenses of buying an airplane, such
as pre-purchase inspections and needed repairs, sales taxes, acquisition
costs, legal and cpa fees? Do you consider them part of each co-owners
capital account and therefore part of the valuation of the partnership and
transferable to new partners? Or do you treat them as a one time expense
covered equally by the current co-owners and not to be considered part of
their capital accounts or future valuations?
--
Jim Burns III

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The way we handle it is simple: Each of the three owners owns 1/3 of the
airplane "as is". Each pays 1/3 of all costs except for fuel, which is
bought by the pilot using the plane. This works out well since we all use
the plane roughly the same number of hours/year. When we bought the plane,
the purchase price and all associated costs were split 3 ways. Each
co-owner is free to sell his "share", with the proviso that the purchaser
must be approved by the other two co-owners. If we decided to sell the plane
as a group, we would split all net proceeds.

--
-Elliott Drucker

[Ben Jackson]

In article >,
Jim > wrote:
>
>How do you treat the one time initial expenses of buying an airplane, such
>as pre-purchase inspections and needed repairs, sales taxes, acquisition
>costs, legal and cpa fees? Do you consider them part of each co-owners
>capital account

Just look at it from the perspective of a buyer (either for the entire
plane or a share). I would expect that the new buyer would only be
interested in the market value of the plane, not the expenses you incurred.
For example, if you bought a plane with a prepurchase inspection and
paid sales tax on it and *immediately* sold it, is it worth more money?
No? Then those were expenses.

--
Ben Jackson
>
http://www.ben.com/

[Jim]

I agree. My idea would be to keep the initial expenses separate from the
initial capital account and to label those initial expenses a cost of
playing the game. A new buyer would not be willing to pay more than the
value of his share of the net equity (airplane, engine reserve, emergency
repair fund) of the co-ownership due to the previous owners acquisition
costs.
--
Jim Burns III

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[dutch]

When my partner and I bought a plane, we did the search together and jointly
made all decisions about what repairs and upgrades we would make. I paid
for the airplane, delivery fees, etc etc, and then when everything was set
up he paid me for half of everything I incurred. But that was starting
fresh. This wouldn't work for a new partner joining an existing group -
would probably have to be based on market value.


"Jim" > wrote in message
...
> I've been studying AOPA's sample copy of a co-ownership agreement and have
a
> couple questions to those who are involved in co-ownerships.
>
> How do you treat the one time initial expenses of buying an airplane, such
> as pre-purchase inspections and needed repairs, sales taxes, acquisition
> costs, legal and cpa fees? Do you consider them part of each co-owners
> capital account and therefore part of the valuation of the partnership and
> transferable to new partners? Or do you treat them as a one time expense
> covered equally by the current co-owners and not to be considered part of
> their capital accounts or future valuations?
> --
> Jim Burns III
>
> Remove "nospam" to reply
>
>