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?

"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.

George,

If you bought and sold a 4 wheeler and made a few bucks would
you report it? What about a car? See where I'm going?


Trip


In article BDxdf.1644$Pa4.1059@trndny01, says...

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.

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.



This is not correct.


Trip

TripFarmer wrote:

If you bought and sold a 4 wheeler and made a few bucks would
you report it? What about a car? See where I'm going?

Yeah, I see where you're going, but I'm running a small business. I make very
little money at it and write off quite a bit of stuff, which makes me a target
for an audit. I use TurboTax to calculate my returns, and they don't seem to
have considered aircraft ownership in their package.

As it turns out, the total cost of the aircraft and added equipment is well over
the price I got for the plane, so I don't have a tax liability there. When I
asked the original question, I felt there were three possibilities there. One
would have treated the entire selling price as income, one would allow me to get
a capital loss on the sale, and the third is this one. This is satisfactory.

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.

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.

All other things being equal, Yes.


"Steve Foley" wrote in message
news:J54ef.456$Rb.274@trndny01...
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.