Sales Tax Deduction

Help me understand this as it seems too good to be true. For this tax
year (2005) we can choose to deduct sales tax on aircraft, if it is
taxed at the same rate, from income on our federal returns. So, if I
live in Texas (no state income tax) and if I buy an aircraft from a
Texas dealer before the end of the year, I can deduct the entire amount
of sales tax for this transaction on my federal return (from income of
course). Is this correct? Are aircraft sales in Texas taxed at the
same "general" amount? (ex 8.25%) Simple math for $250,000 C182 would
be $20,625 in taxes (thus this amount can be deducted).

Didn't work that way for us... What do ya have an old Enron accountant
or something? :-) Good luck.

Jon Kraus
'79 Mooney 201

Mark B wrote:
Help me understand this as it seems too good to be true. For this tax
year (2005) we can choose to deduct sales tax on aircraft, if it is
taxed at the same rate, from income on our federal returns. So, if I
live in Texas (no state income tax) and if I buy an aircraft from a
Texas dealer before the end of the year, I can deduct the entire amount
of sales tax for this transaction on my federal return (from income of
course). Is this correct? Are aircraft sales in Texas taxed at the
same "general" amount? (ex 8.25%) Simple math for $250,000 C182 would
be $20,625 in taxes (thus this amount can be deducted).

It depends. What you are referring to is part of the American Jobs Creation
Act of 2004, whereby the IRS created a set of Optional State Sales Tax
Tables from which you can decide whether you wish to deduct the state sales
tax you've paid from your Federal Tax return, OR whether you wish to deduct
the amount of your state income tax paid from your Federal Tax Return.

Checkout:
http://www.fool.com/taxes/2005/taxes050114.htm
and
http://www.aopa.org/members/files/guides/tax_guide.html
and
http://www.irs.gov/pub/irs-pdf/p600.pdf



"Mark B" wrote in message
oups.com...
Help me understand this as it seems too good to be true. For this tax
year (2005) we can choose to deduct sales tax on aircraft, if it is
taxed at the same rate, from income on our federal returns. So, if I
live in Texas (no state income tax) and if I buy an aircraft from a
Texas dealer before the end of the year, I can deduct the entire amount
of sales tax for this transaction on my federal return (from income of
course). Is this correct? Are aircraft sales in Texas taxed at the
same "general" amount? (ex 8.25%) Simple math for $250,000 C182 would
be $20,625 in taxes (thus this amount can be deducted).