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Aircraft tax question



 
 
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  #1  
Old November 13th 05, 03:35 AM
George Patterson
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Default Aircraft tax question

Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a private
individual and used for pleasure.

George Patterson
Drink is the curse of the land. It makes you quarrel with your neighbor.
It makes you shoot at your landlord. And it makes you miss him.
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  #2  
Old November 13th 05, 04:40 AM
BTIZ
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Default Aircraft tax question

ok... I'm not a tax expert... but when you sell a car.. what taxes apply to
the seller..
is it a capital gains or loss.. if you intend to take a capital gain/loss be
sure to factor in depreciation

I can't ever imagine it being a gain, unless it's an antique bird that has
really appreciated in value..

the buyer pays all sales taxes..
BT

"George Patterson" wrote in message
news:[email protected]
Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a
private individual and used for pleasure.

George Patterson
Drink is the curse of the land. It makes you quarrel with your
neighbor.
It makes you shoot at your landlord. And it makes you miss him.



  #3  
Old November 13th 05, 05:05 AM
George Patterson
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Default Aircraft tax question

BTIZ wrote:
ok... I'm not a tax expert... but when you sell a car.. what taxes apply to
the seller..


According to the IRS, the selling price of the car is taxed as income. I would
prefer that that is not the case with aircraft.

George Patterson
Drink is the curse of the land. It makes you quarrel with your neighbor.
It makes you shoot at your landlord. And it makes you miss him.
  #4  
Old November 13th 05, 05:45 AM
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Default Aircraft tax question

George Patterson wrote:
BTIZ wrote:
ok... I'm not a tax expert... but when you sell a car.. what taxes apply to
the seller..


According to the IRS, the selling price of the car is taxed as income. I would
prefer that that is not the case with aircraft.


George Patterson
Drink is the curse of the land. It makes you quarrel with your neighbor.
It makes you shoot at your landlord. And it makes you miss him.



The profit on anything you sell is taxed as income.

How many used things have you sold at a profit after repairs, etc.?

--
Jim Pennino

Remove .spam.sux to reply.
  #5  
Old November 13th 05, 05:47 AM
Ron Rosenfeld
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Default Aircraft tax question

On Sun, 13 Nov 2005 02:35:13 GMT, George Patterson
wrote:

Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a private
individual and used for pleasure.

George Patterson
Drink is the curse of the land. It makes you quarrel with your neighbor.
It makes you shoot at your landlord. And it makes you miss him.


Your 1/2 right. My understanding is that the gain on a sale of an asset
held for personal use is includable in your income; however, any loss is
not deductible, except in the case of casualty or theft.

:-((

Don't forget that it is only the gain that is taxed. That is the
difference between your net receipts on the sale less the basis.
Calculating the basis may or may not be tricky, and, depending on your
situation, may warrant a discussion with someone who knows what he or she
is talking about :-))


Ron (EPM) (N5843Q, Mooney M20E) (CP, ASEL, ASES, IA)
  #6  
Old November 13th 05, 05:51 AM
Mike Rapoport
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Default Aircraft tax question

You don't factor in depreciation unless you depreciated it for tax purposes.

Mike
MU-2

"BTIZ" wrote in message
news:[email protected]
ok... I'm not a tax expert... but when you sell a car.. what taxes apply
to the seller..
is it a capital gains or loss.. if you intend to take a capital gain/loss
be sure to factor in depreciation

I can't ever imagine it being a gain, unless it's an antique bird that has
really appreciated in value..

the buyer pays all sales taxes..
BT

"George Patterson" wrote in message
news:[email protected]
Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a
private individual and used for pleasure.

George Patterson
Drink is the curse of the land. It makes you quarrel with your
neighbor.
It makes you shoot at your landlord. And it makes you miss him.





  #7  
Old November 13th 05, 06:01 AM
Peter R.
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Posts: n/a
Default Aircraft tax question

George Patterson wrote:

Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a private
individual and used for pleasure.


I cannot imagine any US federal tax scenarios applying in this case unless
the aircraft was depreciated. Normally that doesn't happen unless the
aircraft is flown for some business purpose.

--
Peter
Not a tax accountant but uses an aircraft for business and depreciates it.























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  #8  
Old November 13th 05, 06:05 AM
Mike Rapoport
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Default Aircraft tax question


"George Patterson" wrote in message
news:[email protected]
Ok, I know we have some tax experts out there. Tell me. When you sell an
aircraft, what taxes apply to the seller? Is this a capital gains/loss
situation? We're talking about an aircraft owned by and registered to a
private individual and used for pleasure.

George Patterson
Drink is the curse of the land. It makes you quarrel with your
neighbor.
It makes you shoot at your landlord. And it makes you miss him.




If you did not expense the costs of flying and did not depreciate it, I
would be inclined to leave it off your tax return. Figuring out your cost
basis after years of ownership would be very difficult if not impossible.
You can't deduct the loss on sale as that loss would be attributed to your
(personal, pleasure) use. I would just figure that the basis was equal to
the sale price, which is probably true anyway after you figure out what you
spent over the years on upgrading. Now if you bought a P51 in 1970 for 10K
and it sat in your barn until you sole it yesterday for a $990K gain, that
might be different. The only aircraft that I have sold were used for
business and the cost basis was easy to determine. I ended up recapturing
the depreciation as a gain.

Mike
MU-2



  #9  
Old November 13th 05, 07:54 AM
N93332
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Default Aircraft tax question

"Ron Rosenfeld" wrote in message
...
Don't forget that it is only the gain that is taxed. That is the
difference between your net receipts on the sale less the basis.
Calculating the basis may or may not be tricky, and, depending on your
situation, may warrant a discussion with someone who knows what he or she
is talking about :-))


I agree, talk with someone that knows about this stuff...

My aircraft could possibly be sold for about $5-10k more than I purchased it
a few years ago. Personally, I wouldn't claim the capital gain of all $5-10k
and would figure out what all (money-wise) I have put into it to calculate
the cost basis.


  #10  
Old November 13th 05, 02:30 PM
TaxSrv
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Default Aircraft tax question

"Mike Rapoport" wrote:
Figuring out your cost basis after years of ownership
would be very difficult if not impossible.


Not necessarily at all. Basis is simply original cost, plus only
capital expenditures. Latter typically is engine and/or prop,
major overhaul or new. Add amounts spent for avionics plus
additional panel instrumentation, not mere replacements. Subtract
avionics ripped out and sold, removing the sales price, like on
eBay. Paint is never a capital item, but an interior would be if a
significant improvement, like leather replacing cloth or ugly
factory design.

An abnormal case, but mine was $12K new in 1977; so say sold now
for $30K. Avionics items about $5K years ago on a mental tally.
Interior job don't count; it was essentially repair replacement.
So I have a guess $13K taxable gain, at a low capital gain rate. I
need then to dig out the actual avionics invoices, which I should
have in a fat file folder, or list from memory where need be. A
good-faith estimate for basis items can go on a 1040; if audited,
discuss then without much fuss.

If a loss on a personal use aircraft, nothing is reported to IRS,
as it is net gain, not sales price which is reported on 1040 Sch D.

Fred F.

 




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