Did crew-only flights within California to take an interstate-commerce aircraft to a maintenance facility break its use-tax exemption?

Plain-English summary

Earlier Board letters had concluded that a corporate aircraft escaped use tax because it was first functionally used in interstate commerce outside California, entered California during that use, and then remained continuously in interstate commerce while here.

After delivery, the aircraft made several crew-only trips from San Jose to Long Beach for maintenance and unspecified small “glitch” items. Counsel asked whether those California-only trips destroyed the exemption.

Tax counsel said they did not, if their sole purpose was transporting the aircraft to Long Beach for service and maintenance. The answer preserved the earlier assumptions that personnel training concerned this aircraft and test flights were genuinely checking its operating condition.

Citations and references

• Board letters dated September 23 and October 4, 1991 (described but not included)

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/105-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/105-0088.pdf

Original ruling text

105.0088

STATE OF CALIFORNIA

STATE BOARD OF EQUALIZATION

WILLIAM K. BENNETT
First District, Kentfield

1020 N STREET, SACRAMENTO, CALIFORNIA
(P.O. BOX 942879, SACRAMENTO, CALIFORNIA 94279-0001)
(916) 445-6450

BRAD SHERMAN
Second District, Los Angeles
ERNEST J. DRONENBURG, JR.
Third District, San Diego
MATTHEW K. FONG
Fourth District, Los Angeles

March 17, 1992

GRAY DAVIS
Controller, Sacramento

BURTON W. OLIVER
Executive Director

Mr. J--- A. V---, Esq.
---, --- & --Attorneys at Law
Suite XXX, --- --XXXXX --- -----, CA XXXXX
Re:

V--- A---, Inc.
SY GH XX-XXXXXX

Dear Mr. V---:
This is in reply to your December 11, 1991 letter regarding our letters of September 23, 1991 and October 4, 1991. The letters concern the purchase of a corporate aircraft by V--- A---, Inc. Our letters concluded that use tax would not apply to the use of the aircraft by V---, because the aircraft is first functionally used in interstate commerce outside California, enters California in the course of such use, and is then used continuously in interstate commerce while in California. Our conclusion was predicated on the assumption that certain training flights to which you referred were conducted for the purpose of training personnel who will fly the particular aircraft which is the subject of the opinion and that the test flights to which your referred were made for the purpose of determining that the aircraft is in proper operating condition. You note that, V--- has accepted delivery of its corporate aircraft, and there have been several trips from San Jose to Long Beach Airport for purposes of maintenance and small “glitch” type items. You note that, when the aircraft goes to Long Beach for service and maintenance, only the crew is on board for the trip. You note that, since there have been several of such intrastate trips, you wish to confirm that the trips do not disqualify V---’s exemption from use tax.

Mr. J--- A. V---

-2-

March 17, 1992
105.0088

You did not explain what you mean by “glitch type items.” However, if the sole purpose of the intrastate flights is to transport the aircraft to Long Beach for service and maintenance, the flights do not prevent the application of the exemption. Very truly yours,

Ronald L. Dick
Senior Tax Counsel
RLD:sr