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Sales tax deduction for kits

papamike

Well Known Member
Hi everybody. I know I've read posts about using the airplane itself as a tax deduction, but has anybody looked into using the sales tax deduction on large purchases, for separate portions of the RV kit? For example, I bought the wing kit this year. I'd like to look into calling that a large expense under the aircraft category. Of course I'd probably do it again in subsequent years for the fuselage, etc.

I'll quote a CPA friend of mine:

'That?s an interesting question. I can?t find anything authoritative about that specific situation. I can see a rationale for why it should qualify but I think it is likely the IRS would dispute it under audit. This is because the instructions make a point of mentioning that sales tax deductions for homes can include building materials ? yet they don?t make a similar statement under the section for boats and aircraft."

My one response to this is that I think you could argue that building materials for a home are common. I would think that a kit-built airplane is so ?non-mainstream? (couldn?t think of a better word) that they may not even have thought of it.

Not wanting to cause a tax revolution...well...
Just want to save a little money where I can .
 
Don't think so...

I'm in Canada, but do have an accounting background and spent some time working in the US. That said, this opinion is worth what you paid for it.

I don't think you can deduct it. To me, it has more to do with use than whether it is a kit/component vs. a finished aircraft. To be deductable, I think it would have to be an expense associated with some activity/enterprise with earning capacity (i.e. business use). I suppose if you could define your RV as being a business asset, you could deduct something, but I'm not sure if this is possible under experimental rules. Beyond that, the aircraft itself is an asset, not an expense, which would be deducted in a different way (like depreciation) over time.

Trust your CPA more than this post, but I'd be skeptical.
 
agreed, but...

The sales tax deduction also applies to cars, as well as aircraft, which is specifically mentioned. If I bought a complete RV, or any other airplane for that matter, I wouldn't think twice about taking this deduction. The question comes down to is the kit an aircraft or not. The aspect of business use is mentioned nowhere in the language for this deduction. It is simply for sales tax for a large purchase.
 
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Oops...

...completely missed that this was sales tax vs. a deduction against income tax. Totally different ball game, and I have no idea the answer for that.
 
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