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Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations


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A


105.0000 Aircraft—Regulation 1593

Annotation 105.0067


105.0067 Common Carrier Status—Sale to Related Corporation. A corporation's use of two aircraft qualified for the common carrier exemption explained in Regulation 1593(a)(1). It then sold the two aircraft to a related corporation (100% of the stock of each corporation is owned by the same person). The sale was not a transfer of substantially all of the seller's assets. Thus, the sale does not qualify for the exemption provided by section 6281. Therefore, the transaction is a taxable sale unless the purchaser's use qualifies for the common carrier exemption.

Whether the seller's use of an aircraft had previously qualified for the common carrier exemption is not relevant to the determination of whether the purchaser's use qualifies for the exemption, regardless of the common ownership of the seller and the purchaser. Rather, upon the purchase of the aircraft, the purchaser of the aircraft owes use tax on its use unless that purchaser's use qualifies for the exemption. Accordingly, a new 12 consecutive months' test is required to determine if the purchasing corporation uses the aircraft in order to qualify its purchases for the common carrier exemption. 8/16/95.