What determines sale location? (sales/use taxes)

[Douglas Paterson]

I'm sure the experienced buyers & sellers around here have run into this
before....

One prospective plane I'm looking at is for sale in Connecticut (currently
based there). The current ownership is in a Delaware LLC (of a sole
proprietor, who is flying/basing the plane out of CT). Connecticut has 6%
sales tax that apparently applies to even "casual and isolated sales" of
aircraft; Delaware has no sales tax. I'll leave it as an exercise for the
reader to decide which I find more appealing.... :)

So, "where" does this airplane sale take place? Is it wherever the keys get
handed to me? Is it DE, since that's where the owning entity exists? CT,
since that's where the plane's based? Whatever we write in a purchase
agreement?

Separate but related question: Colorado is where I live--BUT, I'm here on
active duty military orders, and my official state of residence is Oregon.
It says so in my military records, any state income tax purposes are with
OR, my motor vehicles are registered in OR, I have an OR driver license, I
vote in OR. I've read AOPA's discussion about Soldiers' and Sailors' Relief
Act *not* applying to aircraft based in the state of assignment, but I
wonder if that's the whole story? Does anyone know more details on that,
ways to avoid paying CO's 2.9% "use" tax (what a crock!), etc? 2.9% sure
beats 6%, but it's not nearly as good as the 0% that OR would want. Is
there some way to register my plane in OR and avoid CO's sticky fingers? I
haven't paid sales taxes on any sort of big-ticket item before, except for
the time I was foolish enough to register a car in Florida--this is killing
me!! :)

Any magic bullets?? I seem to recall the discussion here a couple of weeks
ago concluded that there's no advantage to an LLC ownership construct for a
single person & personal use (i.e., me)--would that help me here at all?

As usual, thanks for any help or advice!
--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[Robert M. Gary]

On May 25, 6:49 pm, "Douglas Paterson"
> wrote:
> I'm sure the experienced buyers & sellers around here have run into this
> before....
>
> One prospective plane I'm looking at is for sale in Connecticut (currently
> based there). The current ownership is in a Delaware LLC (of a sole
> proprietor, who is flying/basing the plane out of CT). Connecticut has 6%
> sales tax that apparently applies to even "casual and isolated sales" of
> aircraft; Delaware has no sales tax. I'll leave it as an exercise for the
> reader to decide which I find more appealing.... :)
>
> So, "where" does this airplane sale take place? Is it wherever the keys get
> handed to me? Is it DE, since that's where the owning entity exists? CT,
> since that's where the plane's based? Whatever we write in a purchase
> agreement?
>
> Separate but related question: Colorado is where I live--BUT, I'm here on
> active duty military orders, and my official state of residence is Oregon.
> It says so in my military records, any state income tax purposes are with
> OR, my motor vehicles are registered in OR, I have an OR driver license, I
> vote in OR. I've read AOPA's discussion about Soldiers' and Sailors' Relief
> Act *not* applying to aircraft based in the state of assignment, but I
> wonder if that's the whole story? Does anyone know more details on that,
> ways to avoid paying CO's 2.9% "use" tax (what a crock!), etc? 2.9% sure
> beats 6%, but it's not nearly as good as the 0% that OR would want. Is
> there some way to register my plane in OR and avoid CO's sticky fingers? I
> haven't paid sales taxes on any sort of big-ticket item before, except for
> the time I was foolish enough to register a car in Florida--this is killing
> me!! :)
>
> Any magic bullets?? I seem to recall the discussion here a couple of weeks
> ago concluded that there's no advantage to an LLC ownership construct for a
> single person & personal use (i.e., me)--would that help me here at all?
>
> As usual, thanks for any help or advice!
> --
> Doug
> "Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
> Zone"
> (my email is spam-proofed; read the address and make the appropriate change
> to contact me)

For the purpose of "use tax" where the sale takes place (or where you
residence is) makes no difference. If you bring the plane into the
state to keep it there (with a few exceptions) you owe "use tax".
In many states (certainly in California (what I know)) you can put
your LLC anywhere in the world you want but if the LLC does *ANY*
business or holds any assets physically in California, you owe $800/yr
in franchise tax on the LLC (not even counting the airplane).
I guess I only know California though, check your local state for
"franchise tax" on the LLC.

-Robert

[Douglas Paterson]

"Robert M. Gary" > wrote in message
ups.com...
>
> For the purpose of "use tax" where the sale takes place (or where you
> residence is) makes no difference. If you bring the plane into the
> state to keep it there (with a few exceptions) you owe "use tax".
> In many states (certainly in California (what I know)) you can put
> your LLC anywhere in the world you want but if the LLC does *ANY*
> business or holds any assets physically in California, you owe $800/yr
> in franchise tax on the LLC (not even counting the airplane).
> I guess I only know California though, check your local state for
> "franchise tax" on the LLC.
>


Robert:

Thanks for the thoughts. I think, though, that you may have confused my 1st
& 2nd questions. Assuming there's nothing I can do to avoid CO's _use_ tax
(grrrrr), it's still well worth my while to structure the sale (if legally
possible) to avoid CT's _sales_ tax (because it's 3.1 percentage points
higher than CO's _use_ tax). In that case, I think where the sale takes
place DOES make a difference--no??

As to the _use_ tax, sad to say that I think you're correct that I'm stuck
there. Seems like, even if I'd bought a plane years ago, they could sock
that to me upon moving to the state. Gotta love the language: it's a tax
on the "privilege" of the use of personal property. Enjoying the use of
legally acquired property [paid for with after-tax dollars outside of the
state, I might add] is a "privilege," eh...? Grrrrr.... I suppose I
should be thankful that the tax collector's not in my house inventorying my
furniture, clothes, computer, and everything else, since the language
certainly includes all personal property!

--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[john smith[_2_]]

How does CT know you just bought the plane?
For all they know, you went back to OR to get it and brought it back.
What state are you going to register it in?
Aas you are TDY, how can the aircraft be considered anything other than
a transient?

[[email protected]]

I barely know squat about this. But I worked with a person on a pre-
purchase
inspection. It was a Deleware LLC. The person bought the whole LLC
which btw included the airplane. There seemed to be advantages to
both
sides on dealing this way.

Already I've told you more than I know about this. You might
investigate,
though.

FWIW Bill Hale


On May 25, 7:49 pm, "Douglas Paterson"
> wrote:
> I'm sure the experienced buyers & sellers around here have run into this
> before....
>
> One prospective plane I'm looking at is for sale in Connecticut (currently
> based there). The current ownership is in a Delaware LLC (of a sole
> proprietor, who is flying/basing the plane out of CT). Connecticut has 6%
> sales tax that apparently applies to even "casual and isolated sales" of
> aircraft; Delaware has no sales tax. I'll leave it as an exercise for the
> reader to decide which I find more appealing.... :)
>
> So, "where" does this airplane sale take place? Is it wherever the keys get
> handed to me? Is it DE, since that's where the owning entity exists? CT,
> since that's where the plane's based? Whatever we write in a purchase
> agreement?
>
> Separate but related question: Colorado is where I live--BUT, I'm here on
> active duty military orders, and my official state of residence is Oregon.
> It says so in my military records, any state income tax purposes are with
> OR, my motor vehicles are registered in OR, I have an OR driver license, I
> vote in OR. I've read AOPA's discussion about Soldiers' and Sailors' Relief
> Act *not* applying to aircraft based in the state of assignment, but I
> wonder if that's the whole story? Does anyone know more details on that,
> ways to avoid paying CO's 2.9% "use" tax (what a crock!), etc? 2.9% sure
> beats 6%, but it's not nearly as good as the 0% that OR would want. Is
> there some way to register my plane in OR and avoid CO's sticky fingers? I
> haven't paid sales taxes on any sort of big-ticket item before, except for
> the time I was foolish enough to register a car in Florida--this is killing



> me!! :)
>
> Any magic bullets?? I seem to recall the discussion here a couple of weeks
> ago concluded that there's no advantage to an LLC ownership construct for a
> single person & personal use (i.e., me)--would that help me here at all?
>
> As usual, thanks for any help or advice!
> --
> Doug
> "Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
> Zone"
> (my email is spam-proofed; read the address and make the appropriate change
> to contact me)

[RK Henry]

On Fri, 25 May 2007 19:49:33 -0600, "Douglas Paterson"
> wrote:

>So, "where" does this airplane sale take place? Is it wherever the keys get
>handed to me? Is it DE, since that's where the owning entity exists? CT,
>since that's where the plane's based? Whatever we write in a purchase
>agreement?

The important question is: Where are you going to base your airplane?
Most states have a use tax and when you import the airplane you're
liable for that. The states and local governments check FAA
registration records, so don't think you're going to save money by
just not mentioning it.

Tennessee periodically sends out letters about my Warrior, trying to
see if there's some way to collect some more tax, noting that they got
my name from the FAA.

I've never bought out of state, but my understanding is that they'll
credit you for sales tax that you paid elsewhere. A wise buyer would
check. And of course preserve those papers forever so you can prove
that you've paid, in case they try to come back later to hit you up
for still more money.

RK Henry

[Douglas Paterson]

"john smith" > wrote in message
...
> How does CT know you just bought the plane?
> For all they know, you went back to OR to get it and brought it back.


I don't know "how they know"--but it would, for example, be fairly trivial
for them to trace a sale via the FAA database, no? Whether they do so or
not is a different question, but from what I'm reading, states' tax agencies
are getting ever more aggressive on this
(http://www.aero-news.net/index.cfm?contentBlockId=b8527739-b125-4922-a224-cf789ea94039,
for example). I'd sure hate to get a surprise bill--tax, penalties, &
interest--some months or years down the road. Finally, at the end of the
day, I want to do this legally--avoiding all the taxes I can, to be sure,
but legally so.

That's the sale angle. Since you mention "bring it back," I think you may
mean to my current location (CO), not CT. That's the use tax angle. I know
that CO follows up on sales--note the reference to the FAA in this sample
letter: http://www.revenue.state.co.us/fairshare_dir/wrap.asp?incl=aircraft

> What state are you going to register it in?

Well, all things being equal, I'd do so in OR (since that's where I do all
my legal stuff, and OR has no sales/use tax and a minimal ($50/yr)
registration fee). However, words I'm getting from the OR Aviation Dept is
that, my military status notwithstanding, if my plane is not based in OR, I
don't register it there. 180° out from the way it works with ground
vehicles....

> Aas you are TDY, how can the aircraft be considered anything other than
> a transient?

I'm not TDY to CO; I'm stationed here (PCS). My residence remains OR, per
the Servicemembers' Civil Relief Act (formerly the Soldiers' and Sailors'
Civil Relief Act of 1940). My layman's reading of the SCRA
(http://usmilitary.about.com/library/milinfo/scra/bl511.htm and associated
pages for relevant parts) makes it clear that my personal property is not
considered to be in Colorado for legal purposes (i.e., taxation)--but,
apparently the Supreme Court disagrees with me
(http://supreme.justia.com/us/395/169/case.html). Seems to me like they
went through an awfully tortured sophistry to come up with use tax not being
included in the SCRA (SSCRA of 1940 at the time of this case), but I guess
that's why lawyers will never be out of work.... :(
--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[Douglas Paterson]

I know it's gauche to respond to one's own posting, but I finally managed to
find at least a partial answer to my question, buried deep in AOPA's
archives (1998):

http://www.aopa.org/members/ftmag/article.cfm?article=369

Scroll/search down to the heading "Where does the actual "sale" take place?"
According to the article, the place of delivery/change of possession
determines where the sale happens....

--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)


"Douglas Paterson" > wrote in message
. ..
> I'm sure the experienced buyers & sellers around here have run into this
> before....
>

[Douglas Paterson]

"Douglas Paterson" > wrote in message
. ..
>
> One prospective plane I'm looking at is for sale in Connecticut (currently
> based there). Connecticut has 6% sales tax that apparently applies to
> even "casual and isolated sales" of aircraft

http://www.cga.ct.gov/2005/pub/Chap219.htm#Sec12-431.htm

I stand corrected (thankfully!): I finally found the actual code (versus
various summations), which states in relevant part, "in case of the purchase
of any ... aircraft other than from ... a retailer of aircraft ... the
receipts therefrom shall not be included in the measure of the sales tax."
It then goes on to say that the CT use tax will apply, but that section
explicitly exempts flyable aircraft leaving the state.

Sales tax issue put to bed. Now, if only the pesky CO use tax would go
away.... ;) I guess I'd rather pay 2.9% than 6%, though!!
--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[David Lesher]

"Douglas Paterson" > writes:

>I'm sure the experienced buyers & sellers around here have run into this
>before....

>One prospective plane I'm looking at is for sale in Connecticut (currently
>based there). The current ownership is in a Delaware LLC (of a sole
>proprietor, who is flying/basing the plane out of CT). Connecticut has 6%
>sales tax that apparently applies to even "casual and isolated sales" of
>aircraft; Delaware has no sales tax. I'll leave it as an exercise for the
>reader to decide which I find more appealing.... :)

>So, "where" does this airplane sale take place? Is it wherever the keys get
>handed to me? Is it DE, since that's where the owning entity exists? CT,
>since that's where the plane's based? Whatever we write in a purchase
>agreement?

Note the Big Boys take over ownership from Boeing well out over the
ocean, for this very reason. I read a WSJ article on same. Needless
to say, the aircraft is full of lawyers:

Seller's Lawyers..
Airline's ...
Finance Company ....
Other Finance Co's....
etc....



--
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

[Douglas Paterson]

"David Lesher" > wrote in message
...
>
>>So, "where" does this airplane sale take place? Is it wherever the keys
>>get
>>handed to me? Is it DE, since that's where the owning entity exists? CT,
>>since that's where the plane's based? Whatever we write in a purchase
>>agreement?
>
> Note the Big Boys take over ownership from Boeing well out over the
> ocean, for this very reason. I read a WSJ article on same. Needless
> to say, the aircraft is full of lawyers:
>


Wow, I'd never heard of that. My Google skills are apparently lacking--do
you have a link for that article, I'd be interested in reading it.

I'd never even considered an airborne sale. Not terribly practical in a
light single, but tantalizing nonetheless.... :) Thanks for the info!
--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[Douglas Paterson]

"Douglas Paterson" > wrote in message
...
>
> Wow, I'd never heard of that. My Google skills are apparently lacking--do
> you have a link for that article, I'd be interested in reading it.
>


I may have hit "send" too quickly--search turned up this when I took _Wall
Street Journal_ out...:

http://mywebtimes.com/ottnews/archives/ottawa/display.php?id=292788

Very interesting.... If anyone has a link to an article that goes more
in-depth on Boeing (and the aircraft-specific angle), please post!
--
Doug
"Where am I to go/Now that I've gone too far?" -- Golden Earring, "Twilight
Zone"
(my email is spam-proofed; read the address and make the appropriate change
to contact me)

[David Lesher]

"Douglas Paterson" > writes:




>I'd never even considered an airborne sale. Not terribly practical in a
>light single, but tantalizing nonetheless.... :) Thanks for the info!

They said that about the Mile High Club as well..

--
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

[Tim Shoppa]

On Jun 2, 10:27 pm, David Lesher > wrote:
> "Douglas Paterson" > writes:
> >I'm sure the experienced buyers & sellers around here have run into this
> >before....
> >One prospective plane I'm looking at is for sale in Connecticut (currently
> >based there). The current ownership is in a Delaware LLC (of a sole
> >proprietor, who is flying/basing the plane out of CT). Connecticut has 6%
> >sales tax that apparently applies to even "casual and isolated sales" of
> >aircraft; Delaware has no sales tax. I'll leave it as an exercise for the
> >reader to decide which I find more appealing.... :)
> >So, "where" does this airplane sale take place? Is it wherever the keys get
> >handed to me? Is it DE, since that's where the owning entity exists? CT,
> >since that's where the plane's based? Whatever we write in a purchase
> >agreement?
>
> Note the Big Boys take over ownership from Boeing well out over the
> ocean, for this very reason. I read a WSJ article on same.

When I lived in BC, I was told by a local that lots of Boeing planes
are delivered at Abbotsford, BC for the purpose of dodging US/
Washington state taxes.

Tim.

[karl gruber[_1_]]

Many Boeing airplanes are "delivered" on a flight over the international
waters of the Pacific Ocean.

"Curator" N185KG


"Tim Shoppa" > wrote in message
ups.com...
> On Jun 2, 10:27 pm, David Lesher > wrote:
>> "Douglas Paterson" > writes:
>> >I'm sure the experienced buyers & sellers around here have run into this
>> >before....
>> >One prospective plane I'm looking at is for sale in Connecticut
>> >(currently
>> >based there). The current ownership is in a Delaware LLC (of a sole
>> >proprietor, who is flying/basing the plane out of CT). Connecticut has
>> >6%
>> >sales tax that apparently applies to even "casual and isolated sales" of
>> >aircraft; Delaware has no sales tax. I'll leave it as an exercise for
>> >the
>> >reader to decide which I find more appealing.... :)
>> >So, "where" does this airplane sale take place? Is it wherever the keys
>> >get
>> >handed to me? Is it DE, since that's where the owning entity exists?
>> >CT,
>> >since that's where the plane's based? Whatever we write in a purchase
>> >agreement?
>>
>> Note the Big Boys take over ownership from Boeing well out over the
>> ocean, for this very reason. I read a WSJ article on same.
>
> When I lived in BC, I was told by a local that lots of Boeing planes
> are delivered at Abbotsford, BC for the purpose of dodging US/
> Washington state taxes.
>
> Tim.
>

[Al G[_2_]]

Ok, so I live in Oregon, just a couple of miles from "international waters",
and in a state that has no use tax or sales tax. Can I accept "delivery" for
a nominal fee, and help a buyer avoid, not evade, taxes?

got my ducky suit, ready to be delivered...

Al G



"karl gruber" > wrote in message
...
> Many Boeing airplanes are "delivered" on a flight over the international
> waters of the Pacific Ocean.
>
> "Curator" N185KG
>
>
> "Tim Shoppa" > wrote in message
> ups.com...
>> On Jun 2, 10:27 pm, David Lesher > wrote:
>>> "Douglas Paterson" > writes:
>>> >I'm sure the experienced buyers & sellers around here have run into
>>> >this
>>> >before....
>>> >One prospective plane I'm looking at is for sale in Connecticut
>>> >(currently
>>> >based there). The current ownership is in a Delaware LLC (of a sole
>>> >proprietor, who is flying/basing the plane out of CT). Connecticut has
>>> >6%
>>> >sales tax that apparently applies to even "casual and isolated sales"
>>> >of
>>> >aircraft; Delaware has no sales tax. I'll leave it as an exercise for
>>> >the
>>> >reader to decide which I find more appealing.... :)
>>> >So, "where" does this airplane sale take place? Is it wherever the
>>> >keys get
>>> >handed to me? Is it DE, since that's where the owning entity exists?
>>> >CT,
>>> >since that's where the plane's based? Whatever we write in a purchase
>>> >agreement?
>>>
>>> Note the Big Boys take over ownership from Boeing well out over the
>>> ocean, for this very reason. I read a WSJ article on same.
>>
>> When I lived in BC, I was told by a local that lots of Boeing planes
>> are delivered at Abbotsford, BC for the purpose of dodging US/
>> Washington state taxes.
>>
>> Tim.
>>
>
>