## Trim ATI-OISNF,Y GENERAL OF T+ExAs

Au-. TNXAIB rev11 JOEIN I.. HILL A- o-AL. December 12. 1974 The Honorable Robert S. Calvert Comptroller of Public Accounts L. B.J. State Office Building Aurtin, Texas Opinion No. H- 470 Re: Exemption of certain aircraft from taxation under Article 20.04(Q), TaxationGeneral. Dear Mr. Calvert:

You have submitted three questions toua concerning the interpretation ofthe Limited Sales, Excise and Use Tax of Chapter 20, Taxation-General, V. T. C.S., to certain types ofaircraft.

Article 20.02, Tax. -Gen., imposes a salee tax on the receipts from the sale, at retail, ofall taxable items andArticle 20.03, Tax, -Gen. imposes an excise tax on the storage, me or other consumption oftaxable itemr purchased, leaeed or rented from any retailer for storage, use or other consumption in thinState. “Taxable items” are defined in Article 20.01 (WI. as tangible personal property. Article 20.04 deak’with exemptions. Paragraph (Q) provides: Certain Aircraft. There are exempted from the taxes imposed by this Chapter the receipts from the sale, use, storage, lease or other consumption of aircraft sold to persons using such aircraft aa certificated or licensed carriers ofpersons or property, or aold to any foreign government of sold topersons who are not residents of this State andrepair services to aircraft operated by a certificated or licensed carrier ofpersons or property.

p. 2147The Honorable Robert S. Calvert page 2 (H-470)

Your first question is: “Is the sale ofan aircraft to a person holding an air-taxi certificate exempt within the terms ofArticle 20.04(Q) above? ”

The operation ofair taxis (defined in 14C.F. F. 55 298.2 and 298.3) is governed by Part 135ofTitle 14, C.F. R. and Section 135.9 calls for an operating certificate. By definition, the holders of such certificate are “certificated or licensed carriers ofpersons or property” and are exempt from the taxes in question. See 49U.S.C.A. 31424.

Your second question asks: “Does either an air worthinees certificate, a certificate of registration, or pilots license qualify a person to purchase anaircraft tax exempt under Article 20.04(Q) above? ” We think not. The certificate towhich reference is made in 20.04(Q) is a certificate authorizing aparticular use ofthe aircraft. The two certificates and the license towhich you refer in thequestion, onthe other hand, have reference to the safety or identification ofthe aircraft and its pilot. The air-worthiness certificate [49 U.S. C.A. 51423(c)] is based onafinding that the aircraft conforms tothe type certificate issued for that plane and onafinding that the aircraft is in condition for safe operation.

A registration certificate 149U.S. C.A. $14031, is evidence of ownership. The pilots license is governed by 49 U.S.C.A~. 91422and ia issued only if it is found that the pilot is, in fact, competent and physically able to serve as an airman. See 14C.F. R. $61.1 et seq. - In our opinion Article 20.04(Q) was designed, inter alia, to exempt from taxation receipts from certain uses ofthe aircraft. Certificates about which you inquired refer to the character of the vehicle andits pilot and are irrelevant to a determination of exemption under Article 20.04(Q). Your third question asks whether the purchaser of theaircraft loses the exemption when the aircraft is used at a flight training school for training purposes.

p. 2148, The Honorable Robert S. Calvert page 3 (H-470)

The exemption granted inArticle 20.04(Q) does not speak to multiple use. However, it is generally held that the primary, as distinguished from the incidental use of the property determines whether it is exempt from taxation. General Data Corp. v. Porterfieid, 257N. E. 2d 359 (Ohio 1970); Mead Corp. v. Glander, 93N.E. 2d 19(Ohio 1950); Heller v. Fergus Ford, Inc., 305N.E. 2d 352 (Ill. App. 4th Div. 1973); cf. Hilltop Village, Inc, v, Kerrville Independent School District, 426KW. 2d 943 (Tex. 1968).

Therefore, the tax exempt status ofanaircraft used as a certificated or licensed carrier ofpersons or property and also used for flight instruction will depend on the facts of each case. If the nonexempt use is merely incidental, it will not destroy the exemption. SUMMA-R Y An air-taxi operator, certified as such by the Federal Civil Aeronautics Board, is a certificated carrier ofpersons or property and thus exempt from taxation under Article 20.04(Q), Taxation-General. The exemption will not be destroyed by anincidental non-exempt use. Possession ofan air-worthiness certificate, a certificate of registration ora pilot’s license, without more, is insufficient to establish an exemption. flVery truly yours, 

# ri_ -B&

JOHN L. HI L Attorney General ofTexas OVED:

LL, First Assistant

C. ROBERT HEATH, Chairman Opinion Committee

p. 2149