2. GENERAL TERMS AND CONCEPTS

2.01 Basing the Aircraft

The decision where to base the aircraft can have significant state tax consequences. Some states have indicated that they will not tax an aircraft which is hangared in another state.1 However, the term hangared is generally not defined in the tax laws. One state lists the following "factors to be considered in determining whether an aircraft is hangared in this state":

In some situations, there may be ambiguity about where the aircraft is based, such as where the aircraft spends the same amount of time in more than one place. Such ambiguity can create problems, since an aircraft is subject to the greatest risk of taxation in the state where the aircraft is based. In most cases, the best strategy is to reduce the risk by picking the most favorable state and take whatever steps are necessary to insure that the aircraft is considered to be based there.

Registration Requirements

Many states do not have a registration requirement for aircraft. However, if the state does have a registration requirement, failure to register can prove costly.3


  1. See, e.g., Xerox Corp., 71 A.D.2d 177 ["use tax may on ly be imposed upon an aircraft at the location at which the aircraft is hangered"]; Tex. Reg. 3.297.
  2. Tex. Reg. 3.297.
  3. In addition to the normal sanctions and penalties, failure to register can prevent the owner from utilizing tax advantages available to registered aircraft. See, e.g., First Security Bank of Idaho, N.A., 73 5 P.2d 1044 (Idaho App. 1986) [failure to register prevented taxpayer from using lower property tax rates applicable to aircraft]; Cincinnati Air Taxi, Inc., 180 N.E.2d 17 (Ohio 1962) [same]; Czars, Inc., Mich. Tax Tribunal, Dkt. No. 220832 (10-1-96) [failure to register as lessor prevented taxpayer from obtaining deferral of sales tax].