Aircraft tax question

"Mike Rapoport" wrote:
OK. I did not realize that *everything* gets added to the
basis even if it was thrown away year ago and you arn't
even selling it when you sell the airplane.) I guess it makes
some sense since the business user would have deducted
these costs over time.

"Sense" has little to do with tax law, which has to also operate
its own way for practical enforcement, and timing tax receipts
today vs. tomorrow if Congress so desires.

Say you originally bot the plane with a Loran, and it stopped
working, so you removed and tossed it. Whether business or not,
there's no accounting loss, since you can't establish the % of
purchase price which was in the Loran. So Loran stays forever in
the basis.

However, if you bot plane and then added Loran for $1500, and sold
it for $100, then you have a business loss if this separate Loran
asset was not fully depreciated. Otherwise a taxable ordinary
gain. For a personal plane, you similarly take the Loran back out
of basis, but with no tax effect ever as to the $100.

However, if the Loran in a personal plane which you installed
stopped working, and you ripped it out and tossed, you're actually
supposed to take it back out of basis (purchase price of plane).

Back to if Loran was in the plane when you bot it, but you sold
working Loran for $100. Whether biz or not, just subtract $100
from basis of plane which forever includes the Loran. It really
all follows a few simple rules.

Fred F.

"TaxSrv" wrote in message
...

Say you originally bot the plane with a Loran,
However, if you bot plane and then added Loran for $1500,
Back to if Loran was in the plane when you bot it, but you sold

Do you mean _bought_ or are you using terminology I'm not familiar with?

His ISP charges by the character.

"Matt Barrow" wrote in message
...

"TaxSrv" wrote in message
...

Say you originally bot the plane with a Loran,
However, if you bot plane and then added Loran for $1500,
Back to if Loran was in the plane when you bot it, but you sold

Do you mean _bought_ or are you using terminology I'm not familiar
with?

"sfb" wrote in message news:mU1ef.7360$9T4.6748@trnddc04...
His ISP charges by the character.

O, I C


"Matt Barrow" wrote in message
...

"TaxSrv" wrote in message
...

Say you originally bot the plane with a Loran,
However, if you bot plane and then added Loran for $1500,
Back to if Loran was in the plane when you bot it, but you sold

Do you mean _bought_ or are you using terminology I'm not familiar with?

Matt Barrow wrote:

"sfb" wrote in message news:mU1ef.7360$9T4.6748@trnddc04...

His ISP charges by the character.


O, I C

No, you mean OIC. You wasted three characters! :-)


Matt

"Matt Barrow" wrote:
Say you originally bot the plane with a Loran,

Do you mean _bought_ or are you using terminology I'm
not familiar with?


I remember it from way back, if not Accounting 101, in college
taxation texts. Short words and small money amounts like $10, in
examples, better focuses the mind on the concept.

Fred F.

TaxSrv wrote:

"Matt Barrow" wrote:

Say you originally bot the plane with a Loran,

Do you mean _bought_ or are you using terminology I'm
not familiar with?



I remember it from way back, if not Accounting 101, in college
taxation texts. Short words and small money amounts like $10, in
examples, better focuses the mind on the concept.

The exception is when the short words aren't really words at all. In
that case all you are doing is completely distracting the reader from
the topic at hand wondering if this really is a new word with some
meaning or simply an illiterate writer.


Matt

So if I bought a damaged aircraft for $5000, repaired it, painted it, and
sold it for $50,000, I would be liable for taxes $45,000?

"TaxSrv" wrote in message
...
"Mike Rapoport" wrote:
OK. I did not realize that *everything* gets added to the
basis even if it was thrown away year ago and you arn't
even selling it when you sell the airplane.) I guess it makes
some sense since the business user would have deducted
these costs over time.

"Sense" has little to do with tax law, which has to also operate
its own way for practical enforcement, and timing tax receipts
today vs. tomorrow if Congress so desires.

Say you originally bot the plane with a Loran, and it stopped
working, so you removed and tossed it. Whether business or not,
there's no accounting loss, since you can't establish the % of
purchase price which was in the Loran. So Loran stays forever in
the basis.

However, if you bot plane and then added Loran for $1500, and sold
it for $100, then you have a business loss if this separate Loran
asset was not fully depreciated. Otherwise a taxable ordinary
gain. For a personal plane, you similarly take the Loran back out
of basis, but with no tax effect ever as to the $100.

However, if the Loran in a personal plane which you installed
stopped working, and you ripped it out and tossed, you're actually
supposed to take it back out of basis (purchase price of plane).

Back to if Loran was in the plane when you bot it, but you sold
working Loran for $100. Whether biz or not, just subtract $100
from basis of plane which forever includes the Loran. It really
all follows a few simple rules.

Fred F.

Steve Foley wrote:
So if I bought a damaged aircraft for $5000, repaired it, painted it, and
sold it for $50,000, I would be liable for taxes $45,000?

That's pretty much the way it works. If you hold it for a year, you are
taxed at the capital gains rate of 15% (plus whatever gouge your state
wants). If you sell it in under a year, you pay whatever your top
tax bracket is one the income.

That figgers.

Note: I'm not selling my plane.

2 More questions:

#1) Could I set up everything on a schedule C and claim a business - sole
proprietor ?

#2) Can you apply a 1031 tax exchange to an aircraft? , ie roll the $50,000
into a $75,000 aircraft and defer the taxes until I sell the $75,000 one.



"Ron Natalie" wrote in message
m...
Steve Foley wrote:
So if I bought a damaged aircraft for $5000, repaired it, painted it,
and
sold it for $50,000, I would be liable for taxes $45,000?

That's pretty much the way it works. If you hold it for a year, you are
taxed at the capital gains rate of 15% (plus whatever gouge your state
wants). If you sell it in under a year, you pay whatever your top
tax bracket is one the income.