8050-2 Question - Gift?

[FL Pilot]

My father owns an airplane. It is registered in his name and not in a LLC. He is very ill and unable to act on his own behalf. My mother has a POA and would like to gift the airplane to me.

Has anyone here gifted an aircraft or received an aircraft as a gift? AOPA told me the POA will be accepted by the FAA in lieu of my father's signature on the 8050-2. I've read that people often write "$1 OVC" on the 8050-2 but that's not entirely accurate for this situation.

Any feedback regarding real world experiences with this type of transaction would be appreciated.

Thanks.

 

[midwestpa24]

My father owns an airplane. It is registered in his name and not in a LLC. He is very ill and unable to act on his own behalf. My mother has a POA and would like to gift the airplane to me.

Has anyone here gifted an aircraft or received an aircraft as a gift? AOPA told me the POA will be accepted by the FAA in lieu of my father's signature on the 8050-2. I've read that people often write "$1 OVC" on the 8050-2 but that's not entirely accurate for this situation.

Any feedback regarding real world experiences with this type of transaction would be appreciated.

Thanks.

Believe you still have to claim the $1. Did the same when my dad gifted me a boat.

 

[Bell206]

"$1 OVC" on the 8050-2 but that's not entirely accurate for this situation.

The FAA doesn't care how much money is exchanged hence the reason they will accept $1 OVC on the 8050-2. If your intent is to beat the tax man by gifting the aircraft then your best bet is talk to a local tax attorney before you submit any paperwork. Each state is different. FYI: As your mom will act as agent (POA) you'll also need to submit a true copy of the that POA along with the 8050-2. Here's a reference:
https://www.faa.gov/licenses_certificates/aircraft_certification/aircraft_registry/media/8050-94.pdf

 

[k9medic]

The FAA doesn't care how much the plane was but the Florida Department of Revenue darn sure will and they WILL find out and WILL ask.

BTDT. Thank God I had a tax attorney that gave me the property references to protect myself when they did an audit.

Here is what you need to reference in order to be exempt from sales tax in Florida - Florida Administrative Code 12A-1.007(25)(a)(1)
https://www.flrules.org/gateway/notice_Files.asp?ID=21292002


(25)(a) The following transfers of ownership of any aircraft, boat, mobile home, motor vehicles, or other vehicles of a class or type required to be registered, licensed, titled, or documented in this state or by the United States Government are exempt from tax, provided that a certificate setting forth the facts and signed under penalty of perjury accompanies the application for title transfer, or if no title certificate is required by law, the application for transfer of license or registration:

1. The transfer of title as a gift. The application for title or, if no title certificate is required, the transfer of license or registration, must be accompanied by a sworn statement which contains a description of the aircraft, boat, mobile home, motor vehicle, or other vehicle, the name and address of the donor and a statement that the title of the vehicle passed without any consideration valued in money, whether paid in money or otherwise, and that no outstanding lien on the described aircraft, boat, mobile home, motor vehicle, or other vehicle is being assumed by applicant, to be tax exempt. In lieu thereof, the Executive Director or the Executive Director’s designee in the responsible division shall estimate the value of the aircraft, boat, mobile home, motor vehicle, or other vehicle and assess tax thereon accordingly. If applicant assumes outstanding lien only, the amount of such outstanding lien is the basis for the tax.

 

[FL Pilot]

Thanks for the feedback and the helpful links. My motivation is not to skirt the tax liability but obviously if there are ways to minmize the tax burden, I'd surely like to consider those options.

What I was really wondering about is whether the FAA looks at the transaction differently as a gift vs. a sale. The 8050-2 does say "hereby sell, grant, transfer. and deliver all rights..." I assume "grant" applies to gift transfers.

I just wanted to be sure weren't any "gotchas" in the process I'm unaware of. We will be able to submit a true copy of the POA.

 

[Bell206]

What I was really wondering about is whether the FAA looks at the transaction differently as a gift vs. a sale.

No. As mentioned the FAA is not interested in the financial side of the transaction. Legal ownership traceability and transfer is their single concern as the aircraft owner (operator) has sole regulatory and operational control.

 

[FL Pilot]

No. As mentioned the FAA is not interested in the financial side of the transaction. Legal ownership traceability and transfer is their single concern as the aircraft owner (operator) has sole regulatory and operational control.

Good to know. Thanks very much.

 

[k9medic]

It's not skirting the law if it truly is a gift which is why you provide a sworn statement. I literally just went through this in November when I got a call out of the blue from the Dept. of Revenue.

 

[FL Pilot]

It's not skirting the law if it truly is a gift which is why you provide a sworn statement. I literally just went through this in November when I got a call out of the blue from the Dept. of Revenue.

Yes. Thanks for pointing that out. I will make sure to get the proper sworn documentation from my mother.

To be clear, you are a Florida resident and received an aircraft as a gift? And with the supporting sworn statement, there was no tax liability on your part?

My parents reside outside of FL but I don't think that should have any bearing.

 

[k9medic]

No. I had a different circumstance but the aviation tax attorney provided me with the link that I provided you. There are specific exemptions for a reason.

If you are a FL resident, just notify the state. Is the plane in Florida?

 

[FL Pilot]

No. I had a different circumstance but the aviation tax attorney provided me with the link that I provided you. There are specific exemptions for a reason.

If you are a FL resident, just notify the state. Is the plane in Florida?

Thanks for clarifying.

No, the plane is in the northeast.

 

[flyingron]

I would talk to the FAA Aircraft Registry folk. They do answer the phones and email. Tell them what is going on and ask for the exact wording. I suspect if your father was the sole single owner, she would sign:
"Father's Name, Owner by Mother's Name, his attorney in fact." However, they can be very picky about what they accept, and may need a copy of the POA as well.

If your father is facing long term care, you should have mom and you contact an elder law attorney. Giving away assets can disqualify him for certain medical benefits. The other issue is that if you get the plane now, you adopt his (probably low) tax basis on it, rather than having it step up if you wait until he passes.

 

[FL Pilot]

I would talk to the FAA Aircraft Registry folk. They do answer the phones and email. Tell them what is going on and ask for the exact wording. I suspect if your father was the sole single owner, she would sign:
"Father's Name, Owner by Mother's Name, his attorney in fact." However, they can be very picky about what they accept, and may need a copy of the POA as well.

If your father is facing long term care, you should have mom and you contact an elder law attorney. Giving away assets can disqualify him for certain medical benefits. The other issue is that if you get the plane now, you adopt his (probably low) tax basis on it, rather than having it step up if you wait until he passes.

Thanks. I plan to call the FAA.

Regarding the eldercare attorney, we had two phone consultations today and that very topic was discussed. Once we retain the attorney, I will clarify whether it would be better to transfer the plane to my mother for now or if we can just go ahead and gift it to me.

You are correct that there are certain pitfalls associated with gifting assets and how doing so could impact his long term care prospects. We are just beginning to learn about the five year look back process.

 

[k9medic]

Okay. I am assuming by your screen name you are in fact in Florida.

If the plane is transferred in another state, taxes MAY be due in that state so if this is the case, you might want to have it moved to Florida and reference the above exemption of sales tax.

 

[jbarrass]

Agree with flyingron. The FAA Aircraft Registry folks answer the phone and are very helpful. They are indeed picky, but they know what they want and will tell you clearly. They are one of the easiest parts of the FAA to talk to.

 

[FL Pilot]

Okay. I am assuming by your screen name you are in fact in Florida.

If the plane is transferred in another state, taxes MAY be due in that state so if this is the case, you might want to have it moved to Florida and reference the above exemption of sales tax.

Yes, I am a FL resident but the airplane is unfortunately located in the northeast and currently unairworthy. It's a kit aircraft that my father built. He basically completed the build and received an airworthiness certificate but ultimately removed much of the instrument panel before ever flying the aircraft. So, it's registered and airworthy in the eyes of the FAA (on paper) but it's not flyable.

I will have no choice but to remove the wings and empennage and have it shipped to FL where I can address the work that will be necessary to get it back to airworthy. It's simply not feasible for me to get it completed where it's currently situated given where I live and the amount of travel involved with my job.

Agree with flyingron. The FAA Aircraft Registry folks answer the phone and are very helpful. They are indeed picky, but they know what they want and will tell you clearly. They are one of the easiest parts of the FAA to talk to.

Good to know. Thanks.

 

[Bell206]

So, it's registered and airworthy in the eyes of the FAA

It's only registered in the eyes of the FAA. They don't "see" airworthiness from a far. Is the registration still valid/active?

It's simply not feasible for me to get it completed where it's currently situated

And you don't have to complete it or make it airworthy to complete the re-registration process as airworthiness is not a required condition. I have registered a number of damaged aircraft to me personally or my side business. Moving the current registration, provided the registration is still valid, into your name would be paramount before any work is performed--at least in my experience. FYI: once a registration expires, after a short period you also lose rights to the current N number which can compound your project. If you want your dad's aircraft the better path is to get the registration in your name, maintain that registration every 3 years, then plan/schedule to get the aircraft to FL at your "leisure."

 

[FL Pilot]

It's only registered in the eyes of the FAA. They don't "see" airworthiness from a far. Is the registration still valid/active?

It was issued an airworthiness certificate after its final inspection from the DAR several years ago. It is currently registered through 4/22.

 

[Bell206]

It was issued an airworthiness certificate after its final inspection from the DAR several years ago.

FYI: having an AWC only determines that the aircraft met the airworthiness requirements of Part 21 at the time of issuance. It doesn't mean the aircraft meets the airworthiness requirements per Part 91 today. In the case of your dad's experimental amateur-built (E/AB) aircraft that means it must meet the conditions listed in the aircraft Operating Limitations that are part of his AWC. Which it appears not to so it is considered unairworthy at this time. And since you're good till 2022 you have plenty of time to work out your plan of getting that aircraft into your name.