Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
315.0000 INSTALLING, REPAIRING, RECONDITIONING IN GENERAL—Regulation 1546
(b) EXCHANGES OF USED FOR RECONDITIONED PROPERTY
315.0353 Airplane Engine Exchanges. A small commercial aviation operator contracts with the manufacturer of the engines which it uses on its aircraft to provide engine maintenance and repair. The manufacturer similarly contracts with several other small operators to provide the same engine maintenance and repair. Since these small operators cannot afford to have an inventory of engines used as modular repair units, the manufacturer owns and maintains a pool of such modules. The operators are charged for participation in the pool by a fixed charge based on operating hours. All modules removed for maintenance or repair are replaced by other modules from this pool to minimize aircraft down time.
The module transactions are regarded as the exchange of used for reconditioned similar property. The amount subject to tax is the amount charged by the engine manufacturer for participation in the pool. 9/21/83.