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Partnership set up
I've been studying AOPA's sample copy of a co-ownership agreement and have a
couple questions to those who are involved in co-ownerships. How do you treat the one time initial expenses of buying an airplane, such as pre-purchase inspections and needed repairs, sales taxes, acquisition costs, legal and cpa fees? Do you consider them part of each co-owners capital account and therefore part of the valuation of the partnership and transferable to new partners? Or do you treat them as a one time expense covered equally by the current co-owners and not to be considered part of their capital accounts or future valuations? -- Jim Burns III Remove "nospam" to reply |
#2
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The way we handle it is simple: Each of the three owners owns 1/3 of the
airplane "as is". Each pays 1/3 of all costs except for fuel, which is bought by the pilot using the plane. This works out well since we all use the plane roughly the same number of hours/year. When we bought the plane, the purchase price and all associated costs were split 3 ways. Each co-owner is free to sell his "share", with the proviso that the purchaser must be approved by the other two co-owners. If we decided to sell the plane as a group, we would split all net proceeds. -- -Elliott Drucker |
#3
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In article ,
Jim wrote: How do you treat the one time initial expenses of buying an airplane, such as pre-purchase inspections and needed repairs, sales taxes, acquisition costs, legal and cpa fees? Do you consider them part of each co-owners capital account Just look at it from the perspective of a buyer (either for the entire plane or a share). I would expect that the new buyer would only be interested in the market value of the plane, not the expenses you incurred. For example, if you bought a plane with a prepurchase inspection and paid sales tax on it and *immediately* sold it, is it worth more money? No? Then those were expenses. -- Ben Jackson http://www.ben.com/ |
#4
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I agree. My idea would be to keep the initial expenses separate from the
initial capital account and to label those initial expenses a cost of playing the game. A new buyer would not be willing to pay more than the value of his share of the net equity (airplane, engine reserve, emergency repair fund) of the co-ownership due to the previous owners acquisition costs. -- Jim Burns III Remove "nospam" to reply |
#5
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When my partner and I bought a plane, we did the search together and jointly
made all decisions about what repairs and upgrades we would make. I paid for the airplane, delivery fees, etc etc, and then when everything was set up he paid me for half of everything I incurred. But that was starting fresh. This wouldn't work for a new partner joining an existing group - would probably have to be based on market value. "Jim" wrote in message ... I've been studying AOPA's sample copy of a co-ownership agreement and have a couple questions to those who are involved in co-ownerships. How do you treat the one time initial expenses of buying an airplane, such as pre-purchase inspections and needed repairs, sales taxes, acquisition costs, legal and cpa fees? Do you consider them part of each co-owners capital account and therefore part of the valuation of the partnership and transferable to new partners? Or do you treat them as a one time expense covered equally by the current co-owners and not to be considered part of their capital accounts or future valuations? -- Jim Burns III Remove "nospam" to reply |
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