Aircraft tax question

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.

Steve Foley wrote:
:

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

If you operate the plane as a business, you can do that. More
deductions are available to you then. The capital gains treatment
however is essentially the same.

#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.

Yes, if it is a depreciable business property you can do the 1031 exchange.

Note that you have to really have a business motive. You can't just
claim the plane as a business and continue to use it personally and
expect preferred tax status.

I don't know if aircraft are different, but with investment real estate
you have to factor in the depreciation if you were entitled to deduct
it, even if you didn't.


Mike Rapoport wrote:

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

Mike
MU-2

"BTIZ" wrote in message
news:Wzydf.769$7A.758@fed1read04...

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:BDxdf.1644$Pa4.1059@trndny01...

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.






--
"You can support the troops but not the president"
--Representative Tom Delay (R-TX), during the Kosovo war.

N93332 wrote:

"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.



You can't count routine repairs as part of the basis. Only "improvements."

--
"You can support the troops but not the president"
--Representative Tom Delay (R-TX), during the Kosovo war.

"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?


Negative. An exception to the rules about capital vs. repair is
that in a planned program of renovation, just about every stinkin'
thing can be capitalized until the project is done and all signed
off. So your basis would be $50,000 if not a bit less.

Fred F.

"xyzzy" wrote:
I don't know if aircraft are different, but with investment real
estate
you have to factor in the depreciation if you were entitled to
deduct
it, even if you didn't.


Only investment property held for production of income (e.g.,
rental) is depreciated. Else, depreciation is not allowable, nor
figured in when the property is sold. Ordinary people were doing
this in hot market areas -- "flipping" vacant residential real
estate, not even bothering with tenants.

Fred F.

I'm talking about the specific case where I buy a basket-case with the
intention of fixing it and selling it.

As I stated, I have no current plans to do that. It's just something I've
dreamed about.


"Ron Natalie" wrote in message
m...
Steve Foley wrote:


Note that you have to really have a business motive. You can't just
claim the plane as a business and continue to use it personally and
expect preferred tax status.

"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?

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

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