AOPA Plane Giveaway and Taxes

Except there the "blue book" on new property is the manufacturers list
price. Fair market value is the price the plane would bring on the open
market between willing sellers and buyer. IRS Pub 561.
http://www.irs.gov/pub/irs-pdf/p561.pdf#search='irs%20fair%20market%20value'

The challenge with a new plane loaded with expensive extras is that it
is unique so willing buyers may be few since they can buy the same plane
new and upgrade it as they choose making the fair market value approach
list prices.

"Ron Natalie" wrote in message
m...
TaxSrv wrote:

That ain't the IRS position. The number on Form 1099 is to be fair
market value, and indeed the value of all the "stuff" added may not
reflect final FMV, as other posters have noted.

I agree with Fred here. In the case of something like a "New Car"
the IRS will consider the value to be the MSRP. However since this
isn't the case, some acceptable appraisal technique (blue book,
etc...) will apply.

"Ron Natalie"wrote:
I agree with Fred here. In the case of something like
a "New Car" the IRS will consider the value to be the
MSRP. However since this isn't the case, some
acceptable appraisal technique (blue book, etc...) will
apply.

The IRS has no basis in case law to enforce MSRP on a car, and
since IRS examination employees buy new cars, they are well aware
what negotiated prices are. The difficulty with arguing FMV on an
airplane is that they may not accept just one appraisal submitted
by the taxpayer. However, since 1998, IRS will have the burden of
proof on this one, so that settlement in an appeals conference
shouldn't be too difficult.

Fred F.

IRS pub 561 puts the responsibility for the appraisal on you and the IRS
is not obligated to accept the appraisal without question. Despite the
magic of the 1998 act, the taxpayer still retains much of the burden of
burden of proof with regard to fair market value.

"TaxSrv" wrote in message
...
"Ron Natalie"wrote:
I agree with Fred here. In the case of something like
a "New Car" the IRS will consider the value to be the
MSRP. However since this isn't the case, some
acceptable appraisal technique (blue book, etc...) will
apply.

The IRS has no basis in case law to enforce MSRP on a car, and
since IRS examination employees buy new cars, they are well aware
what negotiated prices are. The difficulty with arguing FMV on an
airplane is that they may not accept just one appraisal submitted
by the taxpayer. However, since 1998, IRS will have the burden of
proof on this one, so that settlement in an appeals conference
shouldn't be too difficult.

Fred F.

On Sun, 27 Nov 2005 23:32:23 GMT, B A R R Y
wrote:

To use easily followed examples, what's a NEW Cherokee or 172 go for,
compared to a 30 year old, all original version? The 30 year old,
with kick-ass electronics, freshened up propulsion, and a new interior
and paint very well may hit 75-80% of the new one's price.

A new 2005 Archer III with glass panel is $295,000.

A 1975 Archer sells for $60-70k.

Adding a pristine paint job will be $10k, interior $8k, Garmin panel +
STEC A/P $30k, factory reman'ed engine $30k installed. These refurb
prices are on the high side. Sum total =

70 (purchase)
10 paint
8 interior
30 new avionics
30 engine
---------------------
$148k, which is approx 50% of a new Archer.

The reality is a plane decked out as above would not sell for more
than $125k (42%), and in all likelyhood will sell closer to $100k
(34%).

Not a bad deal considering the $100k fixed up Archer will perform
within a few knots, have similar range, and probably a better useful
load than the Archer III.

-Nathan

This is an interesting discussion I would like to see what the consensus
think this AOPA bird is really worth.

The lower powered 112 does not sell as well as the 114 but just a few hours
since SMOH, new paint and nice new interior may have the AOPA birds value up
to around $100,000.
Now add the turbo normalize, and all the fancy new instruments and avionic
glass might add say $50,000.
So I will start the ball rolling and say it will be worth about $150,000 on
the open market.

Incidentally, the AOPA guy who flies it around told me at OSH that it was a
low powered dog and he would prefer his own Comanche !
But it did not have the turbo normalizer on at that point.
I just wish it would come my way !!!

So how far away am I with my valuation of $150,000 ????

--
Roy
N5804F Piper Archer

"I have had some bad landings but I have never missed the runway"


"sfb" wrote in message news:H3Fif.3507$P33.1126@trnddc01...
IRS pub 561 puts the responsibility for the appraisal on you and the IRS
is not obligated to accept the appraisal without question. Despite the
magic of the 1998 act, the taxpayer still retains much of the burden of
burden of proof with regard to fair market value.

"TaxSrv" wrote in message
...
"Ron Natalie"wrote:
I agree with Fred here. In the case of something like
a "New Car" the IRS will consider the value to be the
MSRP. However since this isn't the case, some
acceptable appraisal technique (blue book, etc...) will
apply.

The IRS has no basis in case law to enforce MSRP on a car, and
since IRS examination employees buy new cars, they are well aware
what negotiated prices are. The difficulty with arguing FMV on an
airplane is that they may not accept just one appraisal submitted
by the taxpayer. However, since 1998, IRS will have the burden of
proof on this one, so that settlement in an appeals conference
shouldn't be too difficult.

Fred F.

sfb wrote:
Sure that isn't two separate and distinct transactions - winning and
then selling at a capital loss unless you are 81mm who doesn't think the
IRS exists.

If you sell the plane before you have to pay the taxes on it, the price for
which you sell it is, by definition, the fair market value of the plane. You can
then use that as your basis for the taxes. Of course, if you turn around and
sell it for something ridiculous (like, say, $100), the IRS will be taking a
*very* close look at your finances, the buyer's finances, and any other
relationships between the two of you.

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

"Robert M. Gary" wrote:

That doesn't effect the amount of taxes you pay on it, just when you
pay the taxes.

Accelerated depreciation expense will most likely offset a good portion of
any income tax owed on the awarded aircraft, assuming both events occurred
during the same tax year.

A friend of mine won a new Volvo (automobile) a few years ago in a charity
sweepstakes but opted to take the cash rather than the vehicle. The cash
equivalent was about $40,000. He, as owner of his own insurance business,
had his accountant restate some losses or depreciation (I cannot recall
which) and was able to offset the entire income tax owed on the winnings.


--
Peter

Juan Jimenez wrote:

On what planet? Do you even know what a new 172 costs?

Too much, that's for sure.


--
Peter

Peter R. wrote:
Ron Wanttaja wrote:

Back when rec.aviation participant Margaret Puckette won the AOPA Archer, AOPA
did do some work to lower the valuation of the aircraft, so she didn't have to
pay taxes on the full retail value. However, she was still stuck with a ~$35K
tax bill.

Rush right off and get that aircraft assigned to some business, then start
taking the aggressive depreciation on it! ;-)

Since you can only take depreication against the basis (or cost to put
into service), and since her basis would be $0 since she got the plane
for free, I can't see the point of this strategy.

sfb wrote:
Except there the "blue book" on new property is the manufacturers list
price.

I said that. New items are valued at the MSRP (regardless of how
inflated that might be over what the actual VALUE of the item is).

The challenge with a new plane loaded with expensive extras is that it
is unique so willing buyers may be few since they can buy the same plane
new and upgrade it as they choose making the fair market value approach
list prices.

This is NOT a new aircraft. It's a 1974 aircraft that they've been
overhauling.