Sales Tax and Delivery

[Rob Thomas]

I'm curious if anyone has ever done this:

Purchase a used aircraft in California (my state of residency) and have it
delivered by the dealer to Oregon. There it will stay for 91 days and be
flown on occasion, then brought back down into California.

My real question here is "if I buy the aircraft in California and have it
delivered to Oregon, in what state does my ownership begin?" The tax law is
clear that as soon as I bring the aircraft into California, then I may be
subject to use tax. So, is it my aircraft when I make the purchase in
California, or when I receive the aircraft in Oregon?

r.

[Don Tuite]

On Tue, 02 Mar 2004 18:52:04 GMT, "Rob Thomas"
> wrote:

>I'm curious if anyone has ever done this:
>
>Purchase a used aircraft in California (my state of residency) and have it
>delivered by the dealer to Oregon. There it will stay for 91 days and be
>flown on occasion, then brought back down into California.
>
>My real question here is "if I buy the aircraft in California and have it
>delivered to Oregon, in what state does my ownership begin?" The tax law is
>clear that as soon as I bring the aircraft into California, then I may be
>subject to use tax. So, is it my aircraft when I make the purchase in
>California, or when I receive the aircraft in Oregon?

Save yourself some grief and ask the county assessor beforehand. I
don't expect you'll like what you hear, but then you'll have something
explicit to discuss with your lawyer before you make the purchase.

Don

[Rob Thomas]

Agreed Don. I was just wondering if anyone in the group had done this
before. It would be easier if I could look for an aircraft around my area
and have it delivered to Oregon, but if this is going to cause problems, I
can just start looking out-of-state to begin with.

Just curious to see if anyone else on the group had done this before. In
reading some past posts, it looks like the contract must also be executed
outside of California as well.

r.

"Don Tuite" > wrote in message
...
> On Tue, 02 Mar 2004 18:52:04 GMT, "Rob Thomas"
> > wrote:
>
> >I'm curious if anyone has ever done this:
> >
> >Purchase a used aircraft in California (my state of residency) and have
it
> >delivered by the dealer to Oregon. There it will stay for 91 days and be
> >flown on occasion, then brought back down into California.
> >
> >My real question here is "if I buy the aircraft in California and have it
> >delivered to Oregon, in what state does my ownership begin?" The tax law
is
> >clear that as soon as I bring the aircraft into California, then I may be
> >subject to use tax. So, is it my aircraft when I make the purchase in
> >California, or when I receive the aircraft in Oregon?
>
> Save yourself some grief and ask the county assessor beforehand. I
> don't expect you'll like what you hear, but then you'll have something
> explicit to discuss with your lawyer before you make the purchase.
>
> Don

[[email protected]]

If you look in the archives you will see this subject flogged
repeatedly. The biggest issue is how to prove the aircraft was outside
California---hangar bills, fuel receipts, etc. all help your situation.

But if you are going to be 3 months without your shiny new toy anyway,
why not use it as an opportunity? Buy a great plane with a run-out
engine and overhaul out of state. It's not quite the same as having the
state pay for part of your overhaul, but the net result is similar.

[Rob Thomas]

Actually, this specific question has not been flogged. My question is can
you purchase an aircraft in California, have it delivered by the broker to
Oregon, and 91 days later bring it back into California without sales/use
tax being levied? My issue surrounds the fact that the aircraft is already
in the state that I want to eventually bring it back into.

In reading some material, I believe I have found the answer:

"(b) Shipments Outside the State--When Sales Tax Does Not Apply. Sales tax
does not apply when the property pursuant to the contact of sale, is
required to be shipped and is shipped to a point outside this state by the
retailer, by means of:

1. Facilities operated by the retailer or

2. ..."

So, my understanding is that as long as the broker actually does the
delivery outside of California, then I'm clear of the sales tax. Then just
need to keep it outside the state for 90 days and fly it every so often then
I'm clear of the use tax.

Of course, I'll be talking to a tax advisor on this, but wanted some input
from all the great folks on the group.

I really like your idea about overhauling out of state. Very creative!
Thanks!

r.



> wrote in message
...
> If you look in the archives you will see this subject flogged
> repeatedly. The biggest issue is how to prove the aircraft was outside
> California---hangar bills, fuel receipts, etc. all help your situation.
>
> But if you are going to be 3 months without your shiny new toy anyway,
> why not use it as an opportunity? Buy a great plane with a run-out
> engine and overhaul out of state. It's not quite the same as having the
> state pay for part of your overhaul, but the net result is similar.
>

[[email protected]]

AH, I didn't realize the plane you wanted was already in California.

If you are a state resident and you buy a plane in the same state, they
will levy the use tax, even if you decide to keep it on the moon for 91
days. At least that's how it was explained to me. (I also bought a
plane in CA while living here.)

If you wanted to get sneaky you could have a friend in Oregon or Nevada
buy the plane for you, I guess. Remember to make sure you would
actually save money doing all this---when I calculated the costs of
keeping the plane at a remote airport and going to visit it
occasionally, the benefits lost their appeal rather quickly. But then
my plane wasn't that expensive.


Rob Thomas wrote:
> Actually, this specific question has not been flogged. My question is can
> you purchase an aircraft in California, have it delivered by the broker to
> Oregon, and 91 days later bring it back into California without sales/use

[Ray Andraka]

CA is perhaps different from other states. Rhode Island will whack you with
either a sales tax or a use tax when you bring the airplane into the state as a
state resident regardless of when you purchased the airplane.

Rob Thomas wrote:

> Agreed Don. I was just wondering if anyone in the group had done this
> before. It would be easier if I could look for an aircraft around my area
> and have it delivered to Oregon, but if this is going to cause problems, I
> can just start looking out-of-state to begin with.
>
> Just curious to see if anyone else on the group had done this before. In
> reading some past posts, it looks like the contract must also be executed
> outside of California as well.
>
> r.
>
> "Don Tuite" > wrote in message
> ...
> > On Tue, 02 Mar 2004 18:52:04 GMT, "Rob Thomas"
> > > wrote:
> >
> > >I'm curious if anyone has ever done this:
> > >
> > >Purchase a used aircraft in California (my state of residency) and have
> it
> > >delivered by the dealer to Oregon. There it will stay for 91 days and be
> > >flown on occasion, then brought back down into California.
> > >
> > >My real question here is "if I buy the aircraft in California and have it
> > >delivered to Oregon, in what state does my ownership begin?" The tax law
> is
> > >clear that as soon as I bring the aircraft into California, then I may be
> > >subject to use tax. So, is it my aircraft when I make the purchase in
> > >California, or when I receive the aircraft in Oregon?
> >
> > Save yourself some grief and ask the county assessor beforehand. I
> > don't expect you'll like what you hear, but then you'll have something
> > explicit to discuss with your lawyer before you make the purchase.
> >
> > Don

--
--Ray Andraka, P.E.
President, the Andraka Consulting Group, Inc.
401/884-7930 Fax 401/884-7950
email
http://www.andraka.com

"They that give up essential liberty to obtain a little
temporary safety deserve neither liberty nor safety."
-Benjamin Franklin, 1759

[Rob Thomas]

Thanks! Exactly the type of respone I was looking for.

I'm not really looking to get sneaky, but if they're going to provide a
legal way for me to avoid paying ~$15,000, then I'll seriously consider it.

I think it would definitely be worth it to go through the trouble...

r.

> wrote in message
...
> AH, I didn't realize the plane you wanted was already in California.
>
> If you are a state resident and you buy a plane in the same state, they
> will levy the use tax, even if you decide to keep it on the moon for 91
> days. At least that's how it was explained to me. (I also bought a
> plane in CA while living here.)
>
> If you wanted to get sneaky you could have a friend in Oregon or Nevada
> buy the plane for you, I guess. Remember to make sure you would
> actually save money doing all this---when I calculated the costs of
> keeping the plane at a remote airport and going to visit it
> occasionally, the benefits lost their appeal rather quickly. But then
> my plane wasn't that expensive.
>
>
> Rob Thomas wrote:
> > Actually, this specific question has not been flogged. My question is
can
> > you purchase an aircraft in California, have it delivered by the broker
to
> > Oregon, and 91 days later bring it back into California without
sales/use
>

[Rob Thomas]

If you keep the aircraft out of state for 91 days after purchase, then there
is no use tax in California. You do have to actually use the aircraft
during the 91 days, it just can't be kept in storage.

r.

"Ray Andraka" > wrote in message
...
> CA is perhaps different from other states. Rhode Island will whack you
with
> either a sales tax or a use tax when you bring the airplane into the state
as a
> state resident regardless of when you purchased the airplane.
>
> Rob Thomas wrote:
>
> > Agreed Don. I was just wondering if anyone in the group had done this
> > before. It would be easier if I could look for an aircraft around my
area
> > and have it delivered to Oregon, but if this is going to cause problems,
I
> > can just start looking out-of-state to begin with.
> >
> > Just curious to see if anyone else on the group had done this before.
In
> > reading some past posts, it looks like the contract must also be
executed
> > outside of California as well.
> >
> > r.
> >
> > "Don Tuite" > wrote in message
> > ...
> > > On Tue, 02 Mar 2004 18:52:04 GMT, "Rob Thomas"
> > > > wrote:
> > >
> > > >I'm curious if anyone has ever done this:
> > > >
> > > >Purchase a used aircraft in California (my state of residency) and
have
> > it
> > > >delivered by the dealer to Oregon. There it will stay for 91 days
and be
> > > >flown on occasion, then brought back down into California.
> > > >
> > > >My real question here is "if I buy the aircraft in California and
have it
> > > >delivered to Oregon, in what state does my ownership begin?" The tax
law
> > is
> > > >clear that as soon as I bring the aircraft into California, then I
may be
> > > >subject to use tax. So, is it my aircraft when I make the purchase
in
> > > >California, or when I receive the aircraft in Oregon?
> > >
> > > Save yourself some grief and ask the county assessor beforehand. I
> > > don't expect you'll like what you hear, but then you'll have something
> > > explicit to discuss with your lawyer before you make the purchase.
> > >
> > > Don
>
> --
> --Ray Andraka, P.E.
> President, the Andraka Consulting Group, Inc.
> 401/884-7930 Fax 401/884-7950
> email
> http://www.andraka.com
>
> "They that give up essential liberty to obtain a little
> temporary safety deserve neither liberty nor safety."
> -Benjamin Franklin, 1759
>
>

[[email protected]]

That sounds like a nice plane.... ;) (For what it's worth, my tax bill
was only $4300)

I highly recommend you go talk to an aviation lawyer who understands tax
ramifications of what you are planning. There are some companies that
specialize in doing stuff like this, but I have no idea what they charge.

> legal way for me to avoid paying ~$15,000, then I'll seriously consider it.

[David Lesher]

"Rob Thomas" > writes:


>"(b) Shipments Outside the State--When Sales Tax Does Not Apply. Sales tax
>does not apply when the property pursuant to the contact of sale, is
>required to be shipped and is shipped to a point outside this state by the
>retailer, by means of:

........


Note that Big Iron is routinely "purchased" in-flight, over
International Waters. Care to guess why? Yep!

--
A host is a host from coast to
& no one will talk to a host that's close........[v].(301) 56-LINUX
Unless the host (that isn't close).........................pob 1433
is busy, hung or dead....................................20915-1433

[Craig Prouse]

In article >,
"Rob Thomas" > wrote:

> Thanks! Exactly the type of respone I was looking for.
>
> I'm not really looking to get sneaky, but if they're going to provide a
> legal way for me to avoid paying ~$15,000, then I'll seriously consider it.
>
> I think it would definitely be worth it to go through the trouble...


Perhaps there is someone up in Oregon who wants to buy your airplane and
is willing to sell it right back to you.

http://www.aeromarinetaxpros.com/
http://www.astc.com/

[ZikZak]

On 3/2/04 10:52 AM, in article ,
"Rob Thomas" > wrote:

> I'm curious if anyone has ever done this:
>
> Purchase a used aircraft in California (my state of residency) and have it
> delivered by the dealer to Oregon. There it will stay for 91 days and be
> flown on occasion, then brought back down into California.
>
> My real question here is "if I buy the aircraft in California and have it
> delivered to Oregon, in what state does my ownership begin?" The tax law is
> clear that as soon as I bring the aircraft into California, then I may be
> subject to use tax. So, is it my aircraft when I make the purchase in
> California, or when I receive the aircraft in Oregon?
>
> r.
>
>

I bought an aircraft about a year and a half ago. I live in Eureka, so
keeping it in Oregon was easy. I was successful in obtaining a sales tax
waiver. There is really no need to go to a professional; all you need to do
is keep records. There are some things I kept in mind:

* Do NOT go for the straight 90-day exemption. Go for the 90-days-out-of-180
exemption, and stay out for 120 days to cover all bases. This prevents the
tax board from disqualifying you because of some single day on a whim. If
you apply for the straight exemption, the tax board will examine your log
books and say, "We think you *overflew* California during this here flight.
Sorry."

* Keep PERFECT records of where the aircraft was located on EVERY DAY for
six months following the purchase, and actually keep the airplane out of
state. Make sure people see your airplane there too. The tax board
telephoned every airport at which I claimed to keep the airplane for more
than a single night to confirm that I actually had kept the airplane there.

* I believe that a CA resident cannot purchase an aircraft currently
registered inside the state and be exempt here. I phoned the tax board to
ask about this one, but I forget the exact response. But I do remember
throwing out consideration of California-based airplanes after that
conversation.

* Go on a nice coast-to-coast cross country trip during the exemption
period. You don't get the exemption if you don't make significant
out-of-state use of the airplane.

* After the 120 days is up, apply for the exemption before the tax board has
a chance to send you a tax return.

Good Luck!

[Rob Thomas]

Awesome! Thanks!

r.

"ZikZak" > wrote in message
...
> On 3/2/04 10:52 AM, in article ,
> "Rob Thomas" > wrote:
>
> > I'm curious if anyone has ever done this:
> >
> > Purchase a used aircraft in California (my state of residency) and have
it
> > delivered by the dealer to Oregon. There it will stay for 91 days and
be
> > flown on occasion, then brought back down into California.
> >
> > My real question here is "if I buy the aircraft in California and have
it
> > delivered to Oregon, in what state does my ownership begin?" The tax
law is
> > clear that as soon as I bring the aircraft into California, then I may
be
> > subject to use tax. So, is it my aircraft when I make the purchase in
> > California, or when I receive the aircraft in Oregon?
> >
> > r.
> >
> >
>
> I bought an aircraft about a year and a half ago. I live in Eureka, so
> keeping it in Oregon was easy. I was successful in obtaining a sales tax
> waiver. There is really no need to go to a professional; all you need to
do
> is keep records. There are some things I kept in mind:
>
> * Do NOT go for the straight 90-day exemption. Go for the
90-days-out-of-180
> exemption, and stay out for 120 days to cover all bases. This prevents the
> tax board from disqualifying you because of some single day on a whim. If
> you apply for the straight exemption, the tax board will examine your log
> books and say, "We think you *overflew* California during this here
flight.
> Sorry."
>
> * Keep PERFECT records of where the aircraft was located on EVERY DAY for
> six months following the purchase, and actually keep the airplane out of
> state. Make sure people see your airplane there too. The tax board
> telephoned every airport at which I claimed to keep the airplane for more
> than a single night to confirm that I actually had kept the airplane
there.
>
> * I believe that a CA resident cannot purchase an aircraft currently
> registered inside the state and be exempt here. I phoned the tax board to
> ask about this one, but I forget the exact response. But I do remember
> throwing out consideration of California-based airplanes after that
> conversation.
>
> * Go on a nice coast-to-coast cross country trip during the exemption
> period. You don't get the exemption if you don't make significant
> out-of-state use of the airplane.
>
> * After the 120 days is up, apply for the exemption before the tax board
has
> a chance to send you a tax return.
>
> Good Luck!
>

[Rob Thomas]

ZikZak,

You mention a long cross country trip during the period it is out of state.
I had planned on getting up there to fly several times during its stay. Do
you, or anyone else, have an inclination as to how often the aircraft would
need to be flown up there for California to agree that it wasn't sitting up
there in storage?

r.

"ZikZak" > wrote in message
...
> On 3/2/04 10:52 AM, in article ,
> "Rob Thomas" > wrote:
>
> > I'm curious if anyone has ever done this:
> >
> > Purchase a used aircraft in California (my state of residency) and have
it
> > delivered by the dealer to Oregon. There it will stay for 91 days and
be
> > flown on occasion, then brought back down into California.
> >
> > My real question here is "if I buy the aircraft in California and have
it
> > delivered to Oregon, in what state does my ownership begin?" The tax
law is
> > clear that as soon as I bring the aircraft into California, then I may
be
> > subject to use tax. So, is it my aircraft when I make the purchase in
> > California, or when I receive the aircraft in Oregon?
> >
> > r.
> >
> >
>
> I bought an aircraft about a year and a half ago. I live in Eureka, so
> keeping it in Oregon was easy. I was successful in obtaining a sales tax
> waiver. There is really no need to go to a professional; all you need to
do
> is keep records. There are some things I kept in mind:
>
> * Do NOT go for the straight 90-day exemption. Go for the
90-days-out-of-180
> exemption, and stay out for 120 days to cover all bases. This prevents the
> tax board from disqualifying you because of some single day on a whim. If
> you apply for the straight exemption, the tax board will examine your log
> books and say, "We think you *overflew* California during this here
flight.
> Sorry."
>
> * Keep PERFECT records of where the aircraft was located on EVERY DAY for
> six months following the purchase, and actually keep the airplane out of
> state. Make sure people see your airplane there too. The tax board
> telephoned every airport at which I claimed to keep the airplane for more
> than a single night to confirm that I actually had kept the airplane
there.
>
> * I believe that a CA resident cannot purchase an aircraft currently
> registered inside the state and be exempt here. I phoned the tax board to
> ask about this one, but I forget the exact response. But I do remember
> throwing out consideration of California-based airplanes after that
> conversation.
>
> * Go on a nice coast-to-coast cross country trip during the exemption
> period. You don't get the exemption if you don't make significant
> out-of-state use of the airplane.
>
> * After the 120 days is up, apply for the exemption before the tax board
has
> a chance to send you a tax return.
>
> Good Luck!
>

[ZikZak]

On 3/3/04 4:01 PM, in article , "Rob
Thomas" > wrote:

> ZikZak,
>
> You mention a long cross country trip during the period it is out of state.
> I had planned on getting up there to fly several times during its stay. Do
> you, or anyone else, have an inclination as to how often the aircraft would
> need to be flown up there for California to agree that it wasn't sitting up
> there in storage?
>
> r.
>

I don't really know, but I was intending to fly to New York and back anyway,
so that's what I did.

[Dude]

> wrote in message
...
> That sounds like a nice plane.... ;) (For what it's worth, my tax bill
> was only $4300)
>
> I highly recommend you go talk to an aviation lawyer who understands tax
> ramifications of what you are planning. There are some companies that
> specialize in doing stuff like this, but I have no idea what they charge.
>
> > legal way for me to avoid paying ~$15,000, then I'll seriously consider
it.
>

Excellent advice. I am now expert, but here are some thoughts/rambings.

If you want a new plane, with new title, you will likely not be able to get
away with this ruse.

(when you do something to avoid a tax that would appear to be for no other
reason than tax avoidance, they can usually get you. You might try an out
of state corporation for rental, put it on leaseback elsewhere, and not ever
rent it out. Then bring it home and take it private after the failed
venture).

Another idea may be to buy a demo plane from an out of state distributor,
these can be titled new. Then lease the demo back to the dealer for a long
enough period to qualify. It won't be new, it will be broken in. New
title, nearly new plane, bonus depreciation for business use.

Just a thought.