| Many times taxpayers call me when they | | | | |
| receive a notice from the Board of | | | | The following are summaries from some |
| Equalization (BOE); often they feel that they | | | | annotations that establish the BOE's position |
| have been unfairly singled out. Many times | | | | regarding sale for resale: |
| they open the conversation with, "I have a | | | | |
| dealer's license. I don't have to pay tax." | | | | 210.0019 Aircraft. The use of an aircraft by |
| | | | an aircraft dealer to transport executives |
| Unfortunately, I have to be the one to break | | | | and other people, when these people are not |
| the bad news. They have fallen prey to one of | | | | potential purchasers, is not a use for |
| the most insidious lies that resides in the | | | | demonstration and display under Regulation |
| aircraft industry. Worse, this lie permeates | | | | 1669. Such use is subject to tax as set forth |
| into many California businesses that don't | | | | in Regulation 1669(f)(1)(C). 6/29/71. |
| own aircraft. | | | | |
| | | | 210.0580 Transportation of Executives-Or |
| IT IS NOT TRUE THAT A CALIFORNIA SELLER'S | | | | Engineering Tests. Aircraft to transport |
| PERMIT OR AN FAA DEALER'S LICENSE ALLOWS YOU | | | | executives and other people on one-way trips, |
| TO MAKE PURCHASES WITHOUT BECOMING LIABLE FOR | | | | such people not being potential purchasers, |
| THE TAX. | | | | or use of aircraft extensively for |
| | | | engineering tests, do not constitute |
| If you or anyone you know is operating based | | | | ''demonstration or display'' and are taxable |
| on this belief, have them call our office | | | | uses. 1/12/55. |
| today. This is one of the areas that always | | | | |
| rank high on the BOE's list of "most common | | | | The BOE does allow certain flights that are |
| mistakes." | | | | not for demonstration and display. |
| | | | |
| If a taxpayer purchases an aircraft for | | | | 210.0020 Aircraft. An airplane held for sale |
| resale, he is not allowed to make any use of | | | | which is flown around the country to develop |
| the aircraft unless he can support through | | | | interest and which is used by the taxpayer to |
| documentation the use was for demonstration | | | | keep it in condition and to instruct himself |
| and display. Additionally, before you decide | | | | in its proper use, held not subject to use |
| to fly your aircraft for 500 hours a year and | | | | tax. 8/10/65. |
| claim all the flights are for demonstration | | | | |
| and display, be aware that the burden of | | | | However, this is not a license to steal. The |
| proof is on the taxpayer. The use that is | | | | burden of proof is on the taxpayer. That |
| claimed for demonstration and display must | | | | means documentation must be provided to |
| pass what I call the "laugh test." | | | | support the flights were for the purpose of |
| | | | demonstrating it for sale. Don't misconstrue |
| Try describing your actual use of the | | | | the "instruct" part as the right to use the |
| aircraft to any of the following. If your | | | | aircraft to get trained how to fly regardless |
| financial advisor rolls his eyes, your | | | | of how long it takes. PLEASE REFER BACK TO |
| attorney falls face down in his soup, or the | | | | THE LAUGH TEST! |
| tax auditor starts laughing so hard that | | | | |
| tears roll down from his eyes, then it does | | | | In certain cases the taxpayer can charge for |
| not pass the laugh test. | | | | demonstration and display flights. |
| | | | |
| If you intend to claim the property was | | | | 210.0060 Charge for Demonstration. If an |
| purchased for retail you better have: | | | | aircraft is used solely for demonstration or |
| | | | display purposes while being held for sale, |
| 1. Copies of ongoing advertising that promote | | | | the dealer will not incur liability for use |
| your specific aircraft for sale. | | | | tax simply because he makes a charge to the |
| | | | prospective customer to whom the plane is |
| 2. Name, address, and phone number for every | | | | demonstrated but who fails to purchase the |
| person who was on a flight that you are | | | | plane, provided the charge is no more than |
| claiming was for demonstration and display. | | | | the actual expense incurred in the |
| | | | demonstration. Notwithstanding the making of |
| 3. Accurate flight logs for the specific | | | | the charge, it does not appear that the law |
| aircraft. | | | | requires application of the tax if no actual |
| | | | use of the article other than demonstration |
| 4. Fuel receipts that support each flight. | | | | while being held for sale is made. 6/21/57. |