Dollar value declared on glider bill-of-sale

The FAA doesn't care what you paid for the glider. The language on the
bill of sale is just there to establish that there is a contract between
the parties (that there is consideration -- see
https://en.wikipedia.org/wiki/Consideration).

"$1000 and other good and valuable consideration" equals $28,000 or any
other value. It all depends on how you define "good and valuable
consideration." I think you will find a lot of FAA bills of sale use
similar language, and you are not committing fraud if you use this
language. This way you don't broadcast to the world what you paid. I
would bet you would see similar language on the bill of sale of most
corporate jets.

The IRS never looks at these forms, and doesn't care what they say. The
IRS knows that no one ever makes a capital gain on a depreciating asset
like an aircraft, so it won't be coming after anyone for capital gains tax.




-------- Original Message --------
Subject: Dollar value declared on glider bill-of-sale
Date: Sun, 18 Nov 2012 12:10:23 -0800 (PST)
From: son_of_flubber
Newsgroups: rec.aviation.soaring

I'm buying a glider and the seller wants to declare the price paid as
"$1000 and other good and valuable consideration". The actual sale
price is $28,000. The seller wants to do this because when he bought
the glider years ago he used the "$1000 and other good and valuable
consideration" phrase on the previous bill of sale filed with the FAA.
He doesn't want to declare the actual sales price on the FAA form and
then have the IRS come after him for a capital gains tax. The seller
can only see things his way because "this is the way that he has always
done it."

My question is: if I go along with the seller's white lie, will I pay
the price down the road when I sell the glider for say $25,000? Will
the IRS come after me for a $24K capital gain?

Does the FAA automatically share the bill of sale value with the IRS?
I live in a state with no aircraft registration fee/tax so there is no
declaration of the value of the glider to my state.

The FAA bill of sale form does not require my signature, so it is only
the seller that is going on record and misrepresenting the price.

I have some other documentation that establishes the price of purchase
at $28,000 so should I show that to the FAA at this time? Or should I
wait until a potential problem comes up years down the road.