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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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335.0000 Leases of Mobile Transportation Equipment— Regulation 1661
Annotation 335.8000
335.8000 Sale of Leased Aircraft. An aircraft is regarded as mobile transportation equipment under the California Sales and Use Tax Law. A lessor is required to pay tax measured by the purchase price of an aircraft at the time of acquisition, or the lessor may elect to pay tax on the fair rental value basis. If a lessor elects to pay tax on the fair rental basis and the aircraft is subsequently taken out of rental service and resold, the aggregate rental receipts paid may be less than the purchase price of the aircraft. This alone would not trigger application of additional use tax. The election to pay tax on rental receipts is not a true "installment" election, but is an alternative method of tax computation. Thus, if the aircraft is taken out of rental service and sold or otherwise disposed of (including trade-in), no additional use tax would be due by virtue of such an act. Of course, if the aircraft is withdrawn from lease inventory for other use, additional tax will be due. 9/29/97. (M98–3).