Tax Type
Aircraft Sales and Use Tax
Corporation Income Tax
Description
Discussion of taxability
Topic
Persons Subject to Tax
Property Subject to Tax
Taxability of Persons and Transactions
Date Issued
07-31-1984
July 31, 1984
Re: Ruling: Taxable Status
Dear *************
This will acknowledge receipt of your letter dated March 12, 1984 in which you submitted facts concerning Taxpayer. On the basis of such facts you request a ruling as to the taxable status with respect to Virginia income, sales and use, and intangible personal property taxation.
FACTS
Taxpayer, a ***** corporation, is a wholly-owned subsidiary of a foreign manufacturer of commercial aircraft. Taxpayer is in the business of leasing aircraft within the United States. Such aircraft are manufactured by its parent. Taxpayer neither owns nor operates the leased aircraft but leases aircraft from third party lessors and subleases those aircraft to operators.
Taxpayer maintains no office in Virginia but utilizes, as its official designation office and address, the office of another wholly owned subsidiary of Taxpayer's parent corporation. Such subsidiary operates as an independent affiliate of Taxpayer under an independent contractor agreement.
Taxpayer has no paid employees, no real or tangible personal property in Virginia, and no bank account in Virginia. Taxpayer conducts its operations by leasing planes in ***** from purchasers and simultaneously leasing such planes to the United States operators. Taxpayer anticipates that none of the leased planes will be based in Virginia.
On the basis of facts submitted, you request a ruling confirming your conclusions that:
1) Taxpayer is not subject to Virginia income taxation because it has no Virginia source income;
2) If Taxpayer has Virginia source income, it would owe no Virginia income tax and must file only an information return annually because it has no taxable income apportionable to Virginia;
3) The gross proceeds attributable to the aircraft leases to and subleases by Taxpayer are not subject to taxation under either the Virginia Aircraft Sales and Use Tax Act or the Virginia Retail Sales and Use Tax Act;
4) Taxpayer is not subject to Virginia CNOT taxation [Intangible Personal Property Taxation].
DISCUSSION OF TAXABILITY
Taxpayer has no office, property or payroll in Virginia. Its intangible sales would be attributable to Virginia to the extent cost of ***** performance is in Virginia. Data submitted indicates that there will be no cost of performance in Virginia. On the basis of such facts, Taxpayer will not be subject to Virginia corporation income taxation.
§58-441.6 Paragraph (x) provides an exemption from Virginia retail sales and use tax for aircraft subject to the aircraft sales and use tax. If Taxpayer's operations conform to this exemption, the gross proceeds will not be subject to Virginia retail sales and use tax.
For aircraft sales and use tax purposes the aircraft are not sold in Virginia and the facts, as set out above, state that the aircraft are not used in Virginia. Therefore, the gross proceeds from leasing aircraft are not subject to the Virginia aircraft sales and use tax under the provision of §58-685.29, Code of Virginia. Taxpayer is not subject to intangible personal property tax since it will have no inventory in Virginia.
This determination is issued on the basis of facts as set forth in this letter. If the operations of Taxpayer are other than those set out, the tax application upon Taxpayer may change from the determinations made herein.
Sincerely,
W. H. Forst
State Tax Commissioner
Rulings of the Tax Commissioner