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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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325.0000 Interstate and Foreign Commerce—Regulation 1620
Annotation 325.0002.200
(a) In General—Shipments Into California from Points Outside State
325.0002.200 Aircraft Modification. An out-of-state resident purchases an aircraft out of state and first functionally uses it outside California (private and business). The owner thereafter has modifications performed on the aircraft outside California. The aircraft will then be flown within and without the United States. It is anticipated that the aircraft will not enter California within the first 90 days after the owner's acquisition and first functional use of the aircraft and that the aircraft will always be hangared outside California. However, the owner may eventually hangar the aircraft at an airport located in California.
The test applicable to the modifications is separate from the aircraft. That is, if the aircraft is used outside California for 100 days prior to its first entry into California, use tax will not apply to its use in California. If the modifications are performed after 50 days of use outside of California, and then the aircraft, with those modifications, enters California 50 days later, the modification will be presumed to have been purchased for use in California, since the modified aircraft would have entered within 90 days of purchase, even though the aircraft will not be regarded as having been purchased for use in this state. Thus, use tax would apply to the purchase price of the modification unless the modification (i.e., the modified aircraft) is used or stored outside of California one-half or more of the time during the six-month period immediately following the first entry of the modification in California.
If the aircraft does not enter California within 90 days of the purchase (and first functional use) of the modification, excluding time of shipment and time of storage for shipment to California, California Use Tax will not apply to either the purchase of the aircraft or the purchase of the modification. 7/09/96.