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