AOPA Plane Giveaway and Taxes

"Peter R." wrote in message
...
TaxSrv wrote:

Same as on other income like wages, and depending upon one's
taxable income. The marginal tax rates vary between 10 and 35%.

Ok, how about this: When it comes time to sell the winning aircraft (and
face potential capital gains and depreciation recapture, of which I was
previously unaware - tnx, Fred), the winner purchases another business
aircraft that qualifies for a 1031 like-kind aircraft exchange, then does
not aggressively depreciate the second aircraft.

Would that indefinitely defer the depreciation recapture of the winning
aircraft?

--
Peter

Why wouldn't you depreciate that airplane too?

Mike
MU-2

OK, the IRS says in Reg Sec. 1.74-1(a)(2) that the "taxable amount is the
prize's current Fair Market (resale) Value (FMV)". This is in Section 1384
of RIA's Federal Tax Handbook for 2005. So, you would be able to use a
competent Appraiser's appraisal for valuation purposes. Be forewarned that
you will probably be audited so you'd better have used a good appraisal.


Trip

Yes. California has "like taxes" for all our residence taxes. So if you
have a California corp you pay $800/yr "minimum franchise tax". If you
have an out of state company but do business in California we have a
"Foreign Corp" tax of....guess what.... $800/yr minimum.

Its just like sales tax. If you buy something in California you pay
about 8% sales tax. If you buy it out of state but bring it to
California you pay about 8% "use tax".

They'll get you either way. There are lots of stories of people setting
up corps in California and then not using them for anything. At some
point the state finds out about them and goes after them for $800/yr
plus interest/penalities/etc. Even though the corp never actually did
business in California.

BTW: All this applies the same for LLCs and the old fashion, never used
anymore, s-corps.

-Robert

The legal term for that is "arm's lenght transaction". A corp must
report the sale as if you had sold or bought it from a stranger (i.e.
special prices between friends don't effect the reporting).

The bottom line is AOPA writes off a value of the airplane and all of
the other contributers write off the value of their donations on their
taxes. The IRS passes it on and guess what, if you are the lucky
winner, you are it. Just a good example of how the cost of government
is pushed down the hill to the little man.

Lyn N2759P

Same old, same old. This post seems perpetuate the myth that busyness
pay taxes. They do not. All they do is collect taxes from their
customers.

wrote in message
oups.com...
The bottom line is AOPA writes off a value of the airplane and all of
the other contributers write off the value of their donations on their
taxes. The IRS passes it on and guess what, if you are the lucky
winner, you are it. Just a good example of how the cost of government
is pushed down the hill to the little man.

Lyn N2759P

wrote in message
The bottom line is AOPA writes off a value of the airplane
and all of the other contributers write off the value of their
donations on their taxes. The IRS passes it on and guess
what, if you are the lucky winner, you are it. Just a good
example of how the cost of government is pushed down
the hill to the little man.


Tax-exempt organizations like AOPA don't really "write off anything" for
tax advantage, since they pay no tax. A vendor may contribute say
avionics to get advertising value out of the promotion, but their tax
deduction is only the manufacturing cost of the avionics. IOW, your tax
analysis is not even close to reality.

Fred F.

TaxSrv wrote:

A vendor may contribute say
avionics to get advertising value out of the promotion, but their tax
deduction is only the manufacturing cost of the avionics.

Another way to put this is that they get no deduction at all, since all
manufacturing costs are written off as expenses. The donation simply reduces
their income beyond what it would've been had they sold the equipment.

George Patterson
Coffee is only a way of stealing time that should by rights belong to
your slightly older self.

New related question...
As AOPA flies the give-away airplane around prior to presenting it to
the prize winner, how much of the value can be depreciated prior to
awarding/accepting the prize?

How about if you put it up on e-bay with a $10,000 minimum and make the
hidden reserve $750,000. The low ballers will creep bid the thing up to
$40,000 and some sniper will bid another $10,000 in the final seconds.
Auction ends with the highest bid at $50,000, but you don't have to sell
it because they don't make the reserve. Fair Market Value? Why not?
Doubts about a one-time auction? Do it twice and average the 2 highest
ending bids. Lower the reserve on the second auction to $740,000. You
followed ALL the rules.

I don't believe e-bay auctions have ever been used to establish FMV.
What better way short of actually selling the beast can you establish
what the public will pay????? With a house, the appraiser's opinion does
not mean a hill of beans. The selling price establishes value.

Holes in this theory?(I'm sure there are PLENTY).
Thanks,
Mike