Aircraft appraisal for Michigan Use Tax.

Capt. Geoffrey Thorpe

Capt. Geoffrey Thorpe

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Ok, I thought I was getting my ducks in order...​

Then, as I am filling out the form for the Michigan use tax, I get to line 7:​


"The retail value is the dollar value as listed in any recognized guide for use for appraisal purposes at the time the aircraft was purchased."


Great. :mad2:​


Anyone have a clue where I can find something like this for an amateur built, not very common aircraft? (Merlin GT). At a reasonable price? (ha)​


Oh, yea. If that's not enough:
​

"You must include a detailed bill of sale that substantiates the
​
​
​
purchase price and the condition of the aircraft at the time of purchase. The FAA bill of sale is not acceptable"​



&*%%$%$#^&​



 
What better means of determining value exists than the actual sale price? Is there even a recognized guide for determining the value of a homebuilt?
 
Been through this more times than I can count...
You low ball the number... Yes, you have to have a notarized bill of sale or it gets really sticky... They can subpoena the seller into court, so don't get greedy...

They high ball the number (no matter what the bill of sale says she will pull out a blue book and pick a number from it higher than the bill and claim that is the market value)
Then you appeal, and so the the orchestra strikes up the music and the waltz begins - round and round we go...
The state is desperate for money and they will fight for every penny they can gouge from your bleeding hide...

denny-o
 
Capt. Geoffrey Thorpe said:
Ok, I thought I was getting my ducks in order...​

Then, as I am filling out the form for the Michigan use tax, I get to line 7:​


"The retail value is the dollar value as listed in any recognized guide for use for appraisal purposes at the time the aircraft was purchased."


Great. :mad2:​


Anyone have a clue where I can find something like this for an amateur built, not very common aircraft? (Merlin GT). At a reasonable price? (ha)​


Oh, yea. If that's not enough:
​

"You must include a detailed bill of sale that substantiates the
​
purchase price and the condition of the aircraft at the time of purchase. The FAA bill of sale is not acceptable"​



&*%%$%$#^&​
Click to expand...
FWIW. In Illinois they did not accept the FAA bill of sale either. That is because the majority of sales were listed as $1 and the state, displaying remarkable insight, realized that planes actually sell for more than $1.

They too wanted the actual BoS, which in my case was a notebook sheet of paper with the info on it and both the seller's and my signature. For the fair market value I used Vref and the average price if all similar planes on ASO.com. Illinois' use tax is you pay which ever is greater, the ASP or the average market price. Mine worked out to be within a $1000 of each, imagine that!
 
If it's a homebuilt why not use cost of parts. that's what you paid for it.
 
I just send them a copy of a cashiers check with the tax form.
 
Dr. O said:
Been through this more times than I can count...
You low ball the number... Yes, you have to have a notarized bill of sale or it gets really sticky... They can subpoena the seller into court, so don't get greedy...
Click to expand...

I have no intent of claiming other than exactly what I paid.

They high ball the number (no matter what the bill of sale says she will pull out a blue book and pick a number from it higher than the bill and claim that is the market value)
Click to expand...

I have never found a "blue book" that covers this kind of aircraft...

Then you appeal, and so the the orchestra strikes up the music and the waltz begins - round and round we go...
The state is desperate for money and they will fight for every penny they can gouge from your bleeding hide...

denny-o
Click to expand...

If they can't get it from rich pilots, then who can they get it from?
 
EdFred said:
I've done it twice and never been questioned. However, note my wording in my original statement. ;)
Click to expand...
Ok, I see that now. :wink2:

I just got off the phone with "Julie". It doesn't matter what I put on the form. She is going to look it up herself and decide if I paid enough tax...

She said she checks VREF (I think) or "goes on line"...

I'm just gonna fill out the form and see what happens.

I'll attach a copy of _THE_ cashiers check and the purchase agreement...

Gotta love it.:nonod:
 
The problem I see here is that Michigan does not have enough government employees. What they should have in place for airplane and yacht purchases is a system wherein they can only be conducted by a state employee. You, the purchaser, will put the deal together, then meet with the seller in a state official purchasers office.

You hand the purchase money to the state purchaser, she will then axe for the sellers bill of sale, then stamp and sign it, assuring that all amounts are correct. She will then hand the money to the seller, and hand the bill of sale to you, the purchaser. All you will then have to do is pay the sales tax and first years property tax, and it is yours.

The state knows the entire transaction from start to finish, you don't have to furnish bills of sales or anything else. The plane or yacht is yours with no further hassles form the state. That is unless you fail to pay your property tax each year.

This will insure you pay your fair share and the state will be able to provide more jobs to the many deserving people who need them in this tough economy. All problems solved. :)

John
 
You could always have the BoS in full detail, showing the plane at $1,000, and the remainder for training and knowledge transfer about the workings and construction of the aircraft. :D
 
JeffDG said:
You could always have the BoS in full detail, showing the plane at $1,000, and the remainder for training and knowledge transfer about the workings and construction of the aircraft. :D
Click to expand...
You get to pay tax on the greater of what you paid or the "market value"...

And, according to the lady I talked to, she decides what the market value is.
 
Capt. Geoffrey Thorpe said:
You get to pay tax on the greater of what you paid or the "market value"...

And, according to the lady I talked to, she decides what the market value is.
Click to expand...

You'd think they would have dealt with plenty of homebuilts already and know that there's no "blue book" value on them. I suggest you list the FAA approved "manufacturer" i.e. the builder as the make and see what happens.
 
Just to follow up....

I sent in the purchase agreement, a copy of the check, all their forms, and a check for the use tax based on what I paid for the aircraft. The check got cashed and I didn't hear anything for about 6 months.

Then I get a letter stating that the FAA had notified the state that I had bought an airplane and I now owe them the use tax. :rolleyes2:

Going through the forms they sent (most of which I had already sent to them), I find that one form has the option to check the box to claim I already paid the tax. And if I check that box, I need to send copies of the forms I sent before (what, they got lost?) and an appraisal and a bill of sale (but not the FAA one) etc. So I filled out the new form, checked the already done paid box, printed out everything I had sent in before plus a copy of the check I wrote for the use tax (front and back to show they had cashed it) and mailed it in.

So far, all is quiet. Again.
Oh, yea, the new form had a question "Is the airplane for personal use?" or something like that. I check yes. The next line had an essay question, something like "What will the airplane be used for?" How do you answer that? I wrote in "For flying around in when I want to go flying." :dunno:
 
You could push your legislature to adopt something more simple such as our state.

67-3-206. Schedule of fees in lieu of tax for aircraft. (1) The appropriate fee in lieu of tax imposed on aircraft is based on the age and type of aircraft and must be determined from the following schedule: YEARS

0 - 5 6 - 1011 - 2021 - 3031 - 40 Single engine, fixed gear, 200 horsepower and under$ 300$ 175$100$ 50$ 25 Single engine, fixed gear, over 200 horsepower5002501507550 Single engine, retractable gear, 200 horsepower and under60030017510075 Single engine, retractable gear, over 200 horsepower700400200125100 Multi-engine, piston engine800500250175150 Helicopter, piston engine700450225150125 Single engine jet helicopter, prop jet1,500700450300175 Multi-engine jet helicopter, prop jet2,0001,000600400200 Jet engine, no propeller3,0001,500800500250

(2) (a) Except as provided in subsection (2)(b), the age of an aircraft is determined by subtracting the manufacturer's designated model year from the current calendar year.
(b) If the purchase year of an aircraft precedes the designated model year of the aircraft and the aircraft is originally titled in Montana, then the purchase year is considered the model year for the purposes of calculating the fee in lieu of tax.
(3) The fee in lieu of tax imposed on any glider, ultralight, gyrocopter, balloon, homebuilt aircraft, antiques, or any aircraft over 40 years old is $20.


Sorry, the formatting did not come through
 
Capt. Geoffrey Thorpe said:
If they can't get it from rich pilots, then who can they get it from?
Click to expand...

Really? I pay a lesser percentage of tax (as of my total income) as a "rich" pilot than I did as a poor college student. Even my dad pays less (far less) now than he did under Reagan.

My suggestion is to get a better accountant :p
 
JesseD said:
Really? I pay a lesser percentage of tax (as of my total income) as a "rich" pilot than I did as a poor college student. Even my dad pays less (far less) now than he did under Reagan.

My suggestion is to get a better accountant :p
Click to expand...

I'm certainly paying more (as a percentage) now than in the 80's.
 
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