Did an aircraft finance structure qualify when a manufacturer subsidiary leased to a holding company that subleased through one common carrier to another?
Apply this to your situation
This page answers the general question as of 1985. Ask about yours and see what current California tax law says, with citations.
Plain-English summary
An aircraft manufacturer had a sales agreement with the holding company of two common carriers. The holding company assigned its purchase rights to a leasing subsidiary of the manufacturer.
The leasing company would buy the aircraft and lease it back to the holding company. The holding company would sublease it to one common carrier, which would sub-sublease it to the second carrier for commercial operation inside and outside California.
Tax counsel confirmed prior oral advice that the described finance structure qualified for the section 6366.1 aircraft exemption. The letter gives no additional flight-hour, first-use, or documentation facts beyond the stated common-carrier operation and transaction chain.
Citations and references
- California Revenue and Taxation Code section 6366.1 (as cited)
- California Sales and Use Tax Regulation 1593(h) (as cited)
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/105-0290.pdf
Original ruling text
105.0290
STATE OF CALIFORNIA
STATE BOARD OF EQUALIZATION
WILLIAM M. BENNETT
First District, Kentfield
1020 N STREET, SACRAMENTO, CALIFORNIA
(PO BOX 1799, SACRAMENTO, CALIFORNIA 95808)
(916) 445-8485
CONWAY H. COLLIS
Second District, Los Angeles
ERNEST J. DRONENBURG, JR
Third District, San Diego
RICHARD NEVINS
Fourth District, Pasadena
KENNETH CORY
Controller, Sacramento
June 5, 1981
DOUGLAS D. BELL
Executive Secretary
Mr. R. I. F--Director – Tax Administration
M--- Corporation
--- ---, Missouri XXXXX
Dear Mr. F---:
This is in response to your letter of May 24, 1985 which requested confirmation of certain advice rendered to you orally by Assistant Chief Counsel Gary Jugum. You asked that he confirm his advice that the following described transaction qualifies for the aircraft exemption from California sales and use tax as provided in Revenue and Taxation Code Section 6366.1 and Regulation 1593(h). “The transaction involves the finance purchase of a new aircraft from M--Corporation (M), the aircraft manufacturer. M has entered into a sales agreement for the aircraft with the stock holding company of common carriers X & Y. The stock holding company has assigned its rights under the agreement to a leasing company, a subsidiary of M, which will purchase the aircraft from M and lease it to the stock holding company. The stock holding company will sublease the aircraft to common carrier X which will in turn sub-sublease the aircraft to common carrier Y. Common carrier Y will place the aircraft in commercial operation both within and without California. This is to confirm the advice given you by Mr. Jugum that the foregoing transaction qualifies for the aircraft exemption. Very truly yours,
E. Leslie Sorensen, Jr.
Tax Counsel
ELS:rar
What does the law say today, for your facts?
This ruling is from 1985. Ezel checks current California tax law against your situation and cites the authority it relies on.
Opens in Ezel Pro.
- Checks the law as it stands today, not only this page
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace