Often it is believed that simply purchasing an aircraft outside of California eliminates the sales and use tax liability. There is a half truth here; properly purchasing an aircraft outside of California does eliminate the sales tax obligation, however, it does not eliminate the use tax.
Many people do not know how, or where to begin when going through the California sales and use tax exemption process. The simple answer is that you must take delivery of the aircraft outside of California. However, there is more detail behind the simple answer. For example, the contract of sale (purchase agreement) must specifically reference the location where the aircraft will be delivered to the purchaser outside the state.
As standard practice, we advise that the delivery occur in Oregon. Oregon is the closest, non-sales tax state in proximity to California that will not have a jurisdictional claim for sales or use taxes simply because the sale occurs there. Therefore, Oregon is often times the most convenient location. However, it may not be convenient in every situation. There are a total of five non-sales tax states: Oregon, Alaska, Montana, New Hampshire, and Delaware. Many other states have guidelines for non-resident purchasers taking delivery within their state without fearing tax repercussions. Be sure you know the rules.
To properly evidence the delivery outside of California, you must maintain a clear separation between the seller and the buyer. To accomplish this, the seller will be solely responsible for transporting the aircraft to the out of state delivery location, and the buyer will be solely responsible for getting to the delivery location independent of the aircraft they are purchasing. It is recommended that the buyer travel via commercial airlines to generate and obtain confirmation of the travel to the out of state delivery location. In addition, the buyer must not exercise any right or control over the property until after it is delivered (test flights are ok, but insuring the property prior to delivery could pose a problem).
Once the seller and buyer have converged upon the delivery location, it is now time to execute the paperwork. They will execute the FAA Bill of Sale, FAA Registration, any delivery receipts prepared by the seller and a proper delivery document for California sales and use tax purposes. This is referred to by many in the industry as a “6247 statement.” Beware, some tax representatives will charge you for this form. This form when properly and completely executed and notarized will evidence the out of state delivery. The insurance on the property can become effective as of this day.
Upon completion of the delivery, it is recommended that you immediately purchase fuel for the aircraft, using a credit card. Doing so will generate a receipt that will contain the date, location, tail number, and the buyers signature. Keep copies of all your documentation; you will need it to support your exemption.
The out of state delivery is only a small part of the exemption process. There are many factors which come into play when the Board of Equalization is determining where the “place of sale” was. They will look at the contract of sale, insurance binder, evidence of delivery, evidence how the parties converged upon the delivery location, FAA Bill of Sale, FAA Registration, and other pertinent information to develop their conclusion as to where the delivery occurred. If there are conflicting dates, locations, or details, they may conclude that the delivery occurred somewhere other than where you intended, and classify your delivery as “ceremonial.” This means your delivery may jeopardize the availability of the sales and use tax exemption from the onset.
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Help answer the question about tax
What does it mean that the gift tax is tax exclusive and the estate tax is tax inclusive?
I'm studying my notecards about the taxes and I have that written down. Its next to impossible for me to try and find the sentence on that subject in my book as there are a lot of pages on these 2 taxes.
What does it mean that the gift tax is tax excluve, while the estate tax is tax inclusive? Please be specific so I'll understand.
About Author
This article was written by Joe Micallef, CEO of Aero-tax Compliance Experts, LLC. If you have any questions regarding this article, other sales and use tax issues, or want to know if you qualify for an exemption contact our tax experts at (916) 647-6407 or visit us on the web at www.AERO-TAX.com.
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A-False
B-False
C-True
D-False (though true in some sense)
"C" is right one.
Depends on what the tax rate is. Are you talking about sales tax or income tax. Multiply the tax rate by your total ($127.50) and that will be your tax.
I think what you probably meant is this: when you figure the amount of a gift, you DON'T include that tax you are going to pay on it, so there is no tax on the tax. On the other hand, when your figure the estate tax, to DO figure it on the entire net estate–you get no deduction for the amount of estate tax you will pay. So you do pay tax on the tax.
For example, if the tax rate were a flat 50%, and all your unified credit is consumed. If you gave a $2 million gift, you would pay $1 million tax. You are out of pocket $3 million. Taxes ate 1/3, and your beneficiary got 2/3. If, on the other hand, you died with $3 million, you'd pay 1.5 million in tax, and your heirs would only get the other 1.5 million. So, while the stated rate of tax is the same, you pay more with an estate tax than with a gift tax.
Good luck on your exam.
Since the sales tax is paid to the registering authority not the dealer, you'd only pay MA sales tax if you registered it in MA. MA doesn't have a temp tag system so you'll need to get your tags in NH first before you take delivery. If you tag it in MA for the trip back to NH, you will have to pay the MA tax.
This question basically is looking to see if you should itemize your deductions or take the standard deduction.
When you itemize, one of the things itemized is how much in taxes you paid to the states last year. They can figure out how much you paid from your paystub.
They also want to know though, if you owed any money on your 2006 tax return that you paid then, because that counts towards "income taxes paid in 2007" for itemized deduction purposes.
So what this question is asking is:
- Did you owe any income tax on last years return that you paid.
- Did you pay any back income taxes on last years return.
- The key is that it's *state* income taxes. They don't care whether you owed / paid any federal income tax last year.
Nothing too sinister.
i dont understand what you are asking here, but usually you are allowed due process even on tax issues. so if you do not believe the tax man is correct there has to be a way you can dispute this.
You estimate what you are going to make. Look at the 2007 tax rate schedule and find the tax amount that fits that salary and filing status. (Tax rates probably won't change that much this year, so using 2007 rates will be just fine.) Use this tax amount determine if you need to pay estimated tax for 2008.
When you file your tax return next Spring, you get credit for the estimated tax you paid in. If you paid too much, then you get it back in your 2008 refund.
As a practical matter it wouldn't work. It would have to start at something absurd like $20 or more per gallon. That would force conservation measures — today's Toyota Prius would quickly become regarded as a gas guzzler — but the resulting reduction in consumption would force the tax rate to rapidly spiral out of control. If consumption was cut by 80%, the tax would have to increase five fold to maintain the same revenue stream. Imagine a $2,000 fill-up at the gas station.
Forget about the immediate social impact. The urban poor might actually fare pretty well initially with public transportation readily available, but the rural poor would literally be left out in the cold as they typically depend upon older inefficient cars and trucks for basic transportation needs. The price of an airline ticket would cripple the airline industry; air travel is by far the "dirtiest" from a carbon footprint stand point. Europeans would do OK with their rail system, a comparatively clean mode of long-haul transport, but Americans would be in serious trouble. The costs of virtually all goods and services would rise dramatically due to the massive increase in transportation costs. This would cripple the economy in general and lead to wide-spread civil unrest throughout the social strata.
I am assuming that since your income is exempt, you ARE NOT an employee of the US Government, and are therefore entitled to the Foreign Earned Income Exemption (FEIE) of up to $82,400 (as of 2006). I am also assuming that you are not receiving any housing allowance and that you are not subject to SS and Medicare Tax. Finally, I am assuming that your income would equal your adjusted gross income (i.e., no adjustments to income and no tax credits).
Under this set of assumptions, if you are earning $82,400 of exempt income, an equivalent taxable income would be roughly $114,000. Note that this amount does not take into consideration state income taxes as you did not indicate in what state you would be residing. Also excluded is the impact of sales taxes since they are a function of your level of consumption.
The calculation is rather convoluted and I am not aware of any readily available salary conversion sites. This is probably due in part to the many variables that would come into play.
For your information, that $114,000 salary would roughly break down as follows:
$114,000
- 6,045 SS Tax at 6.2% of the first $97,500
- 1,653 Medicare Tax at 1.45%
– 23,857 Federal Tax (assuming 1 exemption and std. deduction)
$ 82,445