When contemplating an aircraft purchase, a potential owner has to consider the ownership structure that will best suit their needs. Oftentimes, only after the aircraft purchase, the owner realizes they do not own the aircraft within the entity that is most beneficial for tax purposes or that limits their liability in the event of an accident.
Aero & Marine Tax Professionals, a consulting firm in Sacramento that consults purchasers of aircraft and vessels on how to avoid sales tax, says that by transferring ownership of an aircraft from one entity to another, an owner can create additional sales/use tax liability.
Tom Alston, CEO of Aero & Marine Tax Professionals, stated “Be careful if you are considering a transfer of your aircraft into another entity. Clients often then ask, If I transfer my aircraft or vessel into a newly formed LLC, corporation, or partnership, can I legally avoid the additional sales/use tax? The answer is, ‘It depends.’ Many people consider transferring their aircraft or vessel for personal liability purposes. If they believe that the transfer will create a taxable transaction, they have to decide whether to pay the tax or take a risk of liability in the event of an accident. There is a solution to that dilemma. By supporting a claim for exemption, the tax will be legally avoided and personal liability will be protected by the transfer.”
Thomas Alston is the President of Aero & Marine Tax Professionals, the pre-eminent experts in California and Arizona sales tax involving airplanes, vehicles, or vessels. The company shows purchasers how to avoid sales tax and to make certain the full value of their next aircraft, vehicle, or vessel goes into their pocket–not the Government’s. He has successfully filed hundreds of tax returns on behalf of clients with the California Department of Tax and Fee Administration (CDTFA).