Business Aviation Lawyer - Stewart H. Lapayowker, P.A.

Would Aircraft Transaction Mediation Help You?

stewart — Mon, 20 May 2013 19:01:38 +0000

Aircraft transactions are getting done, but often the deals are much more difficult to sign or close. Sometimes, the parties are just “stuck” on an issue during the pre-purchase inspection, after it, or right before closing. Sometimes one party may be less experienced with what is “customary” or “market” or “industry standard,” or what a likely outcome might be. Whether in the midst of an active transaction or after its termination in a dispute about a default or a deposit, we are available on a moment’s notice, 24/7, to mediate between the parties to resolve important pending issues, in person or by phone. In aircraft transaction mediation, we help parties increase communication with each other in an effort to come to resolution. When emotions are running high, communicating through a neutral third party can remove many obstacles to a successful transaction. With over 17 years of negotiating and closing aircraft transactions from a buyer’s or seller’s perspective, we’ve probably seen it before. If your objective is to move forward, let us bring our experience to bear to bring you together.

Flying to or Within the EU? There Still May be Ways to Address VAT.

stewart — Mon, 13 May 2013 18:11:50 +0000

U.S. registered aircraft operating within the UK or the EU are subject to being assessed a value added tax of up to 26% of the value of the aircraft. This is generally due to the fact that the UK/EU view typical Part 91 operations as “commercial” under their rules. While, in the good ‘ole days, large jets could be imported at a zero rate of VAT through the UK for free circulation, under pressure from the EU, the UK eliminated that process of import.

Can a permanent import for free circulation still be accomplished on a U.S. registered aircraft? The answer, as usual, is “it depends.” One alternative involves an import into Denmark. Other alternatives involve establishing a connection with a tax-neutral jurisdiction such as the Isle of Man. It is much more difficult, however, to plan for the import after the aircraft is acquired into its U.S. tax-focused structure, since many of the requirements of the import involve interrelationships with the jurisdiction. So, as always, plan ahead if you think that the aircraft will be spending time in the EU or the UK. We have had the opportunity to assist clients with coordination of these imports, including being in attendance with the aircraft overseas for the import, and look forward to being of service. We will be in attendance at the ICM Aviation Conference on the Isle of Man in June and look forward to seeing you there.

Selling Your U.S. Registered Business Jet? Don’t Forget to EXPORT FROM THE UK!

stewart — Sat, 20 Apr 2013 16:43:41 +0000

For many years, large U.S. registered aircraft were routinely imported into the UK at a zero rate of VAT for free circulation in the EU. It was a relatively simple process and the cost was minimal compared with the exposure to VAT one had for operating within the EU (around 26%). However, about 2 years ago, under pressure from the EU, the UK discontinued that type of import. It is not uncommon when closing on a sale of an aircraft that nothing is done about the UK import completed many years earlier. So, what should be done? Technically, the prior importation needs to be cancelled, but more accurately, the aircraft needs to be “exported” from the UK upon sale of the aircraft. Luckily, the UK does not require that the aircraft be in the UK in order to accomplish the export. So don’t forget to add a UK export to your closing checklist!

The 2-Minute Warning and Business Aviation

stewart — Sun, 13 Jan 2013 22:23:56 +0000

A friend of mine asked me if I watch professional basketball on TV. My knee-jerk reaction was to joke that I only watch the last 2 or 3 minutes because that’s when the game is exciting and is won. Then it occurred to me that some think that the closing call of a business aviation transaction is where “it all happens” and what an unfortunate perception that is. Like basketball, or any other sport, the game is won long before the last two minutes or the two-minute warning. There is planning, hard work and during the 3 3/4 quarters before the end is when each team is studying, learning, and planning for the end-game. You can see during a Heat game that Lebron James and Dwayne Wade are studying their opponents, testing the defense for weaknesses, and seeing where their opponents’ strengths are, so that when the time comes, they can execute their strategy and score. If an aircraft purchase agreement is signed, and a business aviation transaction goes smoothly at the end (we like to say “closes with a fizzle”), with relevant registration, state tax, federal tax, DOT, FAA and other issues addressed, it is only because a great deal of work has been done, and experience brought to bear, to plan for it. The old practice that you hear from some of just signing a “form” purchase agreement and delivering a bill of sale are long gone. Business aircraft transactions are complex, and require significant attention to many different issues.

So, when I’m asked again if I watch basketball, my answer will be “I may only watch the last couple of minutes, but I appreciate that it took 58 minutes of blood, sweat and tears to get there.”

SHL.

Your Plane Will Punish You…

stewart — Mon, 07 Jan 2013 16:46:36 +0000

An article written by Mr. Lapayowker appearing in the JSSI Airways newsletter is available here Airways Article. The article addresses the benefits of a consistent maintenance program and the impact that it has on the aircraft during the re-sale process. It also contains other helpful hints.

THE FAA AIRCRAFT REGISTRY IS CLOSED, HOW CAN WE CLOSE?

stewart — Fri, 21 Dec 2012 20:45:53 +0000

At the last moment today, the FAA announced that the registry would be closed on December 24, 2012.

But we had a closing! What do we do?

In the last week of the year we often receive calls from clients that have just determined that they need to close on the purchase or sale of their aircraft by year end. Sometimes these transactions even pop up a day before New Years, sometimes Christmas Eve.

Many times clients are under a mis-impression about what it means to “close”. For example, we often hear “but the FAA filing window is closing in 5 minutes and we won’t have submitted our bill of sale to the window by then” or “there’s just no way we can get our documents to Oklahoma City by Friday”.

Of course, the most conservative approach is to have your local counsel or title company run a search of FAA and International Registry records for liens immediately before dating and submitting your bill of sale and registration application to the FAA at the window. But what if title must under any circumstances transfer on a day that the FAA is closed?

It may surprise you that the effectiveness of a transfer is not governed by Federal law or FAA regulations. The effectiveness of a transfer is governed by State law. When is there an effective sale or transfer? The State law that governs sales of goods is the Uniform Commercial Code in nearly all jurisdictions, and the UCC has provisions about what makes an effective “sale.”

First, for goods in excess of $500, there must be a contract in writing that specifies the quantity of goods to be sold. The Florida UCC also provides that “Unless otherwise explicitly agreed, title passes to the buyer at the time and place at which the seller completes her or his performance with reference to the physical delivery of the goods.…” Typically, your purchase agreement will explicitly provide when title passes, for example upon the dating of the FAA Bill of Sale (or Warranty Bill of Sale) and delivery of the bill of sale to the Buyer (or release to the escrow agent on behalf of the Buyer), which is typically authorized after funds are paid and the delivery receipt executed.

A bill of sale should contain text to implement the conveyance as well as the names of the parties, price or consideration being paid (price is typically found in the purchase agreement and that’s fine), description of the good being sold, and the date.

So, let’s say that we must close on Christmas Eve and the FAA just announced they’ll be closed. Can you still effectively transfer title to the aircraft and close your transaction? Of course. If the bill of sale is dated and delivered to the buyer, and the other requirements set forth in your purchase agreement for title transfer are complete, your transaction is closed. And what if you don’t get that done on Christmas Eve, can you do it on Christmas Day? The law doesn’t take a holiday. The same rules will apply.

The foregoing assumes of course that the parties are comfortable with the lien and registration status of the aircraft (perhaps searches were done very recently).

We wish you a happy and healthy New Year and look forward to serving you right up to December 31 and again in 2013.

SHL.

The Holiday Season is Here — Let’s Be Careful Out There!

stewart — Fri, 23 Nov 2012 16:08:02 +0000

December is a popular time to take delivery of new or pre-owned aircraft. Some buyers of new aircraft may also be anticipating bonus depreciation this year. But the holiday season also draws aircraft owners into the trap of using their newly-acquired aircraft for non-business entertainment flights and perhaps for international trips. It is very important to be careful about this type of use in 2012 so that any tax planning that you have done (e.g. bonus depreciation, entertainment disallowance) will not be adversely affected by actual flight operations. This can be especially surprising if you acquire an aircraft in December. Think about it, instead of trips spread over 365 days and the ability to “catch up” with business flights, every day of December works out to be about 3% of the entire tax year of 2012 with respect to the aircraft! So, if the aircraft will be out of the country for 17 days in December, the aircraft has arguably been used predominantly outside of the U.S. during 2012 and ineligible for depreciation. If there is significant entertainment use in December, the entertainment disallowance can have a severely adverse impact on the deduction you thought you had. Let’s take an example of a new aircraft qualifying for 50% bonus depreciation that is acquired on December 15, 2012. The entire tax year is 16 days. You can see how each use of the aircraft can have a significant impact on any planned tax benefit. Conservative advise is to only fly business trips with aircraft newly acquired in December 2012. Of course, if you have owned your aircraft since January 1, 2012, it’s a good idea to take a look at your non-business and international utilization to see where you are. So let’s be careful out there!

Best wished for a happy and healthy holiday season.

SHL.

Plane & Pilot Magazine’s 2012 Top Aviation Attorneys

stewart — Thu, 04 Oct 2012 22:14:04 +0000

We are excited to be appearing in the November issue of Plane & Pilot magazine in its section entitled 2012 Top Aviation Attorneys!

2012 NBAA Tax, Regulatory and Risk Management Conference

stewart — Tue, 18 Sep 2012 22:16:36 +0000

Please join me and other aviation professionals in Orlando on October 28 and 29, 2012 for the NBAA’s Annual Tax, Regulatory and Risk Management Conference. The conference is designed to give business aviation professionals and their advisors an opportunity to learn about federal, state and local regulations and tax changes in an interactive format. From breakout sessions to discussion-based workshops on key topics, this conference allows attendees to create a customized learning experience. Join your peers and the recognized industry experts on business aviation tax and regulatory policy to stay current on these important topics. Presentations in this year’s conference include: (i) Background and Basics: Federal Excise Taxes, (ii) Background and Basics: Personal Use – Imputing Income and Deductions, (iii) FAA and DOT Regulatory Issues, and (iv) the panel discussion that I’ll be moderating: International Operation and Tax Issues- Focus on the European Union including Value Added Taxes and EU-ETS.

The conference brochure and information about the Convention may be found here: NBAA Events.

We look forward to seeing you at NBAA 2012!

Regards. SHL.

We Rock to Benefit Stomach Cancer Research!

stewart — Wed, 07 Mar 2012 16:59:47 +0000

On March 4, 2012, CantStomachCancer had its third annual benefit at the Improv Hard Rock, Hollywood, Florida. Can’t Stomach Cancer is a charitable foundtion that raises money for stomach cancer research. Stewart H. Lapayowker, P.A., PlaneTalkRadio and Aero Management Solutions, LLC were sponsors of the event for a second year, but instead of a comedy act like Stewart did last year, this year we had a surprise for everyone! We hope you enjoy! http://youtu.be/6INmcOcscc0