View Poll Results: Did the tax liability influence your decision (in any way) to buy or not buy a Ticket

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  • Who cares it’s a $240K cub for the cost of the tax.

    9 22.50%
  • I thought about it but it didn’t stop me from buying a ticket.

    14 35.00%
  • I did not buy a ticket because I would just have to sell the plane to cover the tax.

    13 32.50%
  • I can’t afford a ticket let alone the tax’s

    4 10.00%
Results 1 to 14 of 14

Thread: Aviation Tradeshow Cub and Tax’s

  1. #1
    Member Toddler's Avatar
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    Default Aviation Tradeshow Cub and Tax’s

    There has been a lot of talk on a few of the aviation forums I watch regarding the Super Cub being raffled at the show. Much of it is about the reported value of $240,000 and the associated tax hit the winner will take. Some folks are suggesting the liability may be as high as $90,00. Which leads me to my question:

    Did the tax liability influence anyone’s decision (in any way) to buy or not buy a raffle ticket?
    Normal people believe that if something ain't broke, don't fix it. Engineers believe that if it ain't broke, it doesn't have enough features yet.

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  2. #2
    Member PatrickH's Avatar
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    Default Taxes!!!

    I am probably in the minority here. Their estimated value of the plane is probably way higher than the market value, especially in a poor economy. If you are taxed on the estimate and have to sell the plane, who knows how much you can really get for the plane? You could end up selling it just to cover the tax bill. If they tax on the market value, how is the market value determined unless you sell it? If you can afford the taxes on it and still keep the Cub, you probably already have an expensive airplane. I guess I could at least fly it for a few months while I was trying to sell it. Any way I look at it I would not end up owning the Cub.
    It is not worth the "investment" to me. I would be more interested if they had three planes to hand out that were worth only $80,000 each. Three people would end up with airplanes. Three times the chance to win and a much lower tax bill to have to cover.
    Patrick

  3. #3
    Member ret25yo's Avatar
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    Default

    this is what i'm reading....


    ...The highlight of the weekend is the raffle of a Piper Super Cub rebuilt by Dan's Aircraft repair on Sunday May 2nd. The Cub, valued at $140,000, will be raffled at 5 p.m. "This aircraft comes with Tundra Tires, Landis skis, Aerocet floats and lots of other modification," said Hanson, who indicated that ticket sales are brisk. She said 7,500 tickets will be printed with single ticket prices of $50 or a special five tickets for $225. "Some people are reluctant to buy tickets because they are afraid of the winner's tax on the airplane," said Hanson. " But shoot all you have to do is sell the floats, or skis, or get a loan from the bank to pay the tax."..

    Resources:
    http://www.aero-news.net/index.cfm?c...a-db26b8fd750d

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  4. #4
    Member Toddler's Avatar
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    "Hollingsworth and his suite of mechanics are rebuilding this year’s Piper Super Cub (PA-18) at
    their Merrill Field (MRI) location that is said to be valued at $240,000."


    Quoted from the Alaska Airmen's Press release dated 16 March 2010 Linked below.

    http://alaskaairmen.org/wp-content/u...ft-rebuild.pdf
    Normal people believe that if something ain't broke, don't fix it. Engineers believe that if it ain't broke, it doesn't have enough features yet.

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  5. #5
    Forum Admin Brian M's Avatar
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    Default

    Yep, that thought has come to mind when I was considering purchasing a raffle ticket.

    I konw that prize winnings are taxable, but do they count as part of your gross adjusted income? What I'm getting at is whether that would affect the rate that the rest of my income is taxed at. If I'm usually in a lower tax bracket but got bumped up to a higher tax rate due to winning the plane, I wouldn't just be paying taxes on the plane, but would also be paying a higher tax rate on the rest of my income. Does anyone know if that's how it works?

    I'd love to own that plane, but not at the cost of $90k in taxes and even more taxes on the rest of my income.

  6. #6

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    You guys and gals all keep your paws off my airplane! Guy that sold me my ticket GUARANTEED it was the winning ticket!

  7. #7
    Member ret25yo's Avatar
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    I couldn't imagine a rebuilt super cub at $240,000 hopefully it has every accessory known to flying

    If you cant stand behind the troops in Iraq.. Feel free to stand in front of them.

  8. #8

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    Quote Originally Posted by ret25yo View Post
    I couldn't imagine a rebuilt super cub at $240,000 hopefully it has every accessory known to flying
    Oh, it does have every accessory and then a couple! It is a SWEET airplane (maybe not $240K worth, but dang nice)! My guess is that some rich guy that has a Beaver, a 185 and a brand new Aviat Husky will win it though.

  9. #9
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    That Cub has lots of cool stuff. Stuff I'd never put into a Cub when I was building it. If I won it I'd have a Cub with features I didn't want for a tax bill that was driven up by features and equipment that aren't important to me. For not much more than the tax bill I can build a Cub with the things I do want. I didn't buy tickets.

  10. #10
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    I'm no tax attorney but I'm pretty sure that if you win something like the $240K Cub it would be taxable income which would raise all of your income to the higher tax bracket. If I were to win the Cub I'd talk to a tax guy before I accepted it. However I'm pretty sure I'd take it. Years ago the tax laws allowed you to average your income over several years if you had a windfall like this. I'm not sure if that law is still on the books. Also I'm pretty sure you could get the "fair marked value" of the airplane reduced by having it appraised by a reputable aircraft appraiser. Just a few things to talk to a tax professional about before accepting the plane that we're probably not going to win. In the end I suspect I'd have to sell it but even with the taxes I'd still come out ahead, besides I'd get to fly it for a while before it sold. That's assuming I could afford to insure it!

  11. #11
    Member Float Pilot's Avatar
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    I talked to a couple of folks and was told that the fair market value is what your tax attorney should go for.. The $240 is a good tax write-off for the folks donating parts and labor.

    Had I won... (bought lots of tickets.) I would have sold it for about $160K to 180K. Paid the taxes, refurbed my little PA-11 and bought a beat up C-180 or C-185 for the business. Which itself would be a write-off expense.
    Floatplane,Tailwheel and Firearms Instructor- Dragonfly Aero
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    http://site.dragonflyaero.com

  12. #12

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    Quote Originally Posted by tralika View Post
    I'm no tax attorney but I'm pretty sure that if you win something like the $240K Cub it would be taxable income which would raise all of your income to the higher tax bracket. If I were to win the Cub I'd talk to a tax guy before I accepted it. However I'm pretty sure I'd take it. Years ago the tax laws allowed you to average your income over several years if you had a windfall like this. I'm not sure if that law is still on the books. Also I'm pretty sure you could get the "fair marked value" of the airplane reduced by having it appraised by a reputable aircraft appraiser. Just a few things to talk to a tax professional about before accepting the plane that we're probably not going to win. In the end I suspect I'd have to sell it but even with the taxes I'd still come out ahead, besides I'd get to fly it for a while before it sold. That's assuming I could afford to insure it!
    The federal income tax is a graduated tax. There is no way that by winning this airplane your entire income would be raised to a higher tax bracket costing you more $.

    Take this simple example: If you have $100k in taxable income in 2009, filing as single you pay 10% on the first $8,375, 15% on the amount between $8,375 to $34,000, 20% on the amount between $34,000 and $82,400, and 28% on the amount between $82,400 and $100,000.

    So people would say you are "in the 28% tax bracket" but you are really only paying that 28% on your top $17,600 of income. Your effective tax rate is really about 21% once you average everything.

    So your winnings may be taxed at a higher tax bracket, but the taxes on your other income wouldn't be affected. Put another way you would pay the same taxes on your previous income even if you have to pay a higher tax rate on the part of your income that is winnings from this airplane. Just FYI.

    We all know now who won it, but as you say, even if you owed high five figures in taxes (unlikely) on the winnings you would still come out ahead if you sold it to someone else afterwards. Nothing to sniff at.

    When you fill out the form reporting your winnings income there are ways to "appeal" (for lack of a better word) the estimated value put on it by the sponsoring organization. Fair market value being one of the things most people use. Been there done that, though not with anything near as nice (and expensive) as this airplane.

    Me? I would have sold my current plane to pay most of the taxes and kept the Cub

  13. #13
    Member Float Pilot's Avatar
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    My wife and I promised each other we would do the Goofer Dance (Caddy Shack) in front of everybody at the show...if we had won....
    Floatplane,Tailwheel and Firearms Instructor- Dragonfly Aero
    Experimental Hand-Loader, NRA Life Member
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  14. #14

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    I was hoping for a twofer myself. For the second year in a row I came within minutes of the Nenana Ice Classic winning guess. Have plenty of money to pay the taxes AND buy go juice for my new Cub

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