Tax Type
Aircraft Sales and Use Tax
Description
Purchase and leaseback of aircraft
Topic
Taxability of Persons and Transactions
Date Issued
10-02-1989
October 2, 1989
Re: Ruling Request/ Aircraft Sales and Use Tax
Dear**************
This will reply to your letter of December 6, 1988 seeking a ruling on the application of the Aircraft Sales and Use Tax to the purchase of an aircraft by ****** , for leaseback to ****** subject to an existing lease to an agency of the federal government.
Based on all of the facts and circumstances presented, I find basis for concluding that each of the transactions described in your December 6, 1988 letter qualify for exemption from the Aircraft Sales and Use Tax, provided that the lease to a federal agency would be deemed a "sale" for purposes of Virginia Regulation (VR) 630-11-1501(6), copy enclosed. This requires that the lease be for a period or time substantially equal to the remaining life of the aircraft as determined at the beginning of the lease term, or that payments during the term of lease substantially equal the value of the aircraft.
If the lease qualifies as a sale under VR 630-11-1501(6), the transaction would be exempt from the tax under Virginia Code §58.1-1505. Further, the remaining sale and leaseback transactions described in your letter would be nontaxable sales for resale under Virginia Code §58.1-1501.
I hope that the foregoing has responded to your questions, but let the department know if you have any further questions.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner