Lessor Entitled to Elect to Remit Use Tax on Lease Payments
In Caledesi Holdings, LLC v. Department of Treasury, Michigan Tax Tribunal, No. 358183, March 13, 2012, a lessor of an aircraft was not liable for Michigan use tax based on the aircraft's purchase price because it was entitled to make an election to remit use tax on the lease payments received. The Tax Tribunal found that the taxpayer was engaged in the business of leasing tangible personal property to others for purposes of the Rule 82 election. There was no evidence that the rental rate charged by the taxpayer was inconsistent with the leasing market. Furthermore, the evidence showed that the aircraft was not used by the taxpayer, thereby indicating an absence of a personal motive for the aircraft's purchase. Though the aircraft was only in use for six months before it fell into disrepair, the amount of flight time and low rental receipts did not necessarily mean that the business was not entered into with the purpose of generating a profit.