Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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105.0000 AIRCRAFT—Regulation 1593

Annotation 105.0059

105.0059 Common Carriage. A company purchased and accepted delivery of an aircraft out of state on or about July 3, 1989, and flew it into California that same day. On August 1, 1989, the company leased the aircraft to a certified air carrier. The lease agreement required the company to pay for the pilot and other crew members when the aircraft was used in common carriage. To avoid these charges, the company allowed its president to serve as pilot as often as possible. During this period, the president passed FAA inspections and was certified as a common carrier pilot. During these flights, the president is under the lessee's direction and control. The issue is whether, during the "operational use" test period for this aircraft with the company's president as pilot, the flights would qualify as common carriage.

The undisputed evidence shows that the purpose of the flights was to carry passengers unrelated to the company. The passengers contracted with the lessee for carriage. The lessee billed the customers and the customers paid the lessee at standard common carriage rates. Other than allowing its president to serve as pilot, the company did not participate in these transactions in any way. These flights cannot be considered private use by the company. 10/13/92.