RivetBangers.com

The process seems to start at FAA Registration with form 8050-88:

http://www.faa.gov/licenses_certificate ... 050-88.pdf

If a person buys former kits from out of state individuals who gave up on their projects, and didn't provide any bill of sales, he now has miscellaneous parts and is the owner. Box one, I think, should be checked, therefore no bill of sale is provided with 8050-88. If he registers way early, he still has miscellaneous parts and pieces. A dollar value is difficult to estimate.

A second scenario: What if a person buys an empannage kit from Vans only, obtains and provides a bill of sale, registers early and checks box two. The value would be clear at about $2000. This can be problematic as the state will think this is too small an amount.

How will state departments of taxation (Ohio for example) handle and pursue a sales or use tax claim in both scenarios? Comments?

The FAA is pretty picky and they may not allow you to get away with that.

Van's will issue a BOS to you if you prove the trail of ownership of whatever second hand kits you purchased.

Van's does not put any value on the BOS so that is up to you to claim.

I am sure there is someway to get it registered as there are tons of RV's out there that started life as many kits with many different first owners.

One thing is for sure, those tax people are hard to beat. They can make your life difficult. To me it ain't worth the hassle to try and save a few hundred on a $60K - $???K airplane project.

Don't know about TN but I suspect they are pretty aggressive at collecting taxes. They want to tax free breakfasts at hotels in TN so I'm betting they are going to be pretty picky.

In CA they basically check the bluebook value for aircraft of the type you are registering and base the tax on the average value. Didn't really matter what I put in my form. At least, that's what my county told me.

No way I am paying use tax on an average value... Use tax is only for what you paid for the item or items out of state without paying sales tax on them.

The value of the sum of those parts includes the builders labor and other conciderations like the fact that an assembled and flying airplane is worth more than one in a box....that is not taxable.

Now if you refuse to pay up or give them bogus numbers, they will audit your tax liability themselves and apply whatever they want to and I bet they won't help you out any at all!!!

All of the above applies to paying tax on an airplane you built yourself from a kit and other parts. If you bought a flying airplane, you will get hammered for whatever the BOS said you bought it for. If you try to say you bought a 2006 RV7 for $1.00, they are going to balk big time.

I agree with everything you said Brantel. But, going back to my second example, an empennage kit and other miscellaneous parts. Say a $2000 BOS from vans plus a $1000 no receipt bag of parts. $2000 is declared at time of FAA registry because of the BOS. Now, say I do nothing with it and it sits unassembled for years. I dont see how they could make a case for a bigger dollar because that's all there is. But its now registered.

Svanarts says CA takes the book value....I wonder what the book value is on a "Joe's model Sieben?" Im not aware of any rule that say, you the manufacturer must use "vans" or "rv" in the model name.

My point is, I don't think anyone knows for sure....but Im sure the aggressive tax collectors have a trick up their sleeve.

timotb wrote:Say a $2000 BOS from vans

The good news is that Van's leaves the purchase price of the BOS blank....But they will not issue a BOS until the complete kit is purchased.

To get one out of them for kits that you bought second hand, they state that you must prove the chain of ownership and do this for each subkit if they are bought from different individuals. So somewhere along the line, someone paid full price for the kit.

What you write down as the purchase price is up to you. The tax people are smart though and they want their money so they will most likely not accept a value that is too low.

Brantel wrote:What you write down as the purchase price is up to you. The tax people are smart though and they want their money so they will most likely not accept a value that is too low.

Standard practice for many of us "in the biz" of aircraft sales, is to use "$1+OVC" or One Dollar plus Other Valuable Considerations. The bill of sale is meaningless for the tax man. The tax man commeth looking for your sales receipts, a purchase agreement with full purchase price listed, or they will take it in to their own hands, as has already been stated, to find the highest value they can to hit you with a bill.

Write whatever you want on the bill of sale. They want more than that for proof, so it doesn't matter.

Reason #417 why Montana is a great place

Here's the registration fees in Montana. Note Homebuilt Aircraft is type 0 and only $20/yr. We have no sales or use tax on aircraft.
http://www.mdt.mt.gov/aviation/docs/air ... egfees.pdf


concerning stated values, I have a friend who did a standard build RV-6 in 2000, total investment $28000. not super deluxe, but pretty nice plane

timotb wrote:I agree with everything you said Brantel. But, going back to my second example, an empennage kit and other miscellaneous parts. Say a $2000 BOS from vans plus a $1000 no receipt bag of parts. $2000 is declared at time of FAA registry because of the BOS. Now, say I do nothing with it and it sits unassembled for years. I dont see how they could make a case for a bigger dollar because that's all there is. But its now registered.

Svanarts says CA takes the book value....I wonder what the book value is on a "Joe's model Sieben?" Im not aware of any rule that say, you the manufacturer must use "vans" or "rv" in the model name.

My point is, I don't think anyone knows for sure....but Im sure the aggressive tax collectors have a trick up their sleeve.

Clarification: In CA, the tax clock doesn't start ticking until your register the aircraft. If it sits in a bunch of boxes for years then it's just a bunch of parts, they won't tax you on that.

hydroguy2 wrote:Reason #417 why Montana is a great place

Here's the registration fees in Montana. Note Homebuilt Aircraft is type 0 and only $20/yr. We have no sales or use tax on aircraft.
http://www.mdt.mt.gov/aviation/docs/air ... egfees.pdf


concerning stated values, I have a friend who did a standard build RV-6 in 2000, total investment $28000. not super deluxe, but pretty nice plane

Why haven't I moved to Montana yet?

Oh yeah, the winters.

I wish I understood the concept of "$1+OVC" better.

timotb wrote:I wish I understood the concept of "$1+OVC" better.

There's no need to...like I said, it doesn't matter. OVC could mean $99,999 or it could mean a boat. The bos is for the FAA not the tax man. The FAA doesn't need to know what you paid.

Correct me if I wrong. The FAA shares the BOS with state tax collection departments. The state can use that as their basis to charge use tax. I seen this personally happen back in 1991 with a Cessna 310 I bought. Somehow I got a demand notice for 6% of the BOS at the time from Florida.

I dont know why a BOS is necessary for a home construction anyhow. Not sure why the FAA asks for a BOS when their is no Federal tax involved. I think they ask to help States to collect use tax on the value of kits purchased.

I expect to get a letter within a year from my State demanding additional information or money regardless of what goes on the BOS or if one is even provided. Either way, when filing annual State income tax in Ohio there is a line for "State Use tax owed but not reported." Catch22.

I think this is a bigger question for my accountant on how to proceed.

timotb wrote:Correct me if I wrong. The FAA shares the BOS with state tax collection departments. The state can use that as their basis to charge use tax. I seen this personally happen back in 1991 with a Cessna 310 I bought. Somehow I got a demand notice for 6% of the BOS at the time from Florida.

Could be in some states...I have never heard of that happening in IL. They get the reg notice from the FAA, and then want to see receipts, canceled checks that you've already paid, or they will find others to compare to...all two years or so down the road from when you first reg'd with the FAA. I registered my airplane in Sept 08, and still haven't heard a word from the state as far as taxes or registration goes. Knock on wood...but I have already paid them.