Michigan Use Tax Applicable On Lease of Aircraft

In a recent Michigan Court of Appeals case, the petitioner, an aviation company, argued that their purchase of an aircraft and then subsequent lease of that aircraft to a charter airline was not a taxable transaction subject to state use tax. The Court of Appeals disagreed. The petitioner used two prior cases, M&M Aerotech, Inc. and WPGP1, Inc, Supra, as arguments stating that use tax was not due because the aircraft was purchased for lease to another business. The Michigan Tax Tribunal agreed that these cases were valid but not applicable to this particular case as the taxpayer reserved and exercised the right to use the aircraft, thus making it eligible for taxation under the use tax provisions. (Michigan Court of Appeals, Glieberman Aviation, LCC v. Michigan Department of Treasury, 242532 Tax Tribunal, LC No. 00-266539, Decided February 19, 2004)

Posted on May 15, 2004