Interesting factoid: Selling an airplane for cash and not reporting it to the FBI is presumed money laundering and will land you in a federal penitentiary for 5 years.

The title work and closing expose if there is financing or not due to the filing of liens.

Deals fail due to financing, just like real estate. Sellers prefer cash buyers and buyers often volunteer that information.

Mike C.

Really? I’ve bought and sold airplanes without reporting…..

Or do you mean $5,000,000 airplanes?

I don't know anyone who makes that assumption.

Regulated doesn't mean free of corrupt or dishonest brokers, either. Indeed, it may make it worse since it gives a cloak of credibility to those who likely don't deserve it.

For example, lawyers are regulated. Did that make them generally honest? Don't make me laugh.

Mike C.

Unfortunately, this is a huge grey area, there isn't a dollar amount, but $5M certainly attracts a lot more attention than $50k

The idea is that you, as the seller, have a responsibility to report anything that seems suspicious, I'm not sure how they look at it when you are the owner of the airplane. As professionals engaged in buying and selling airplanes, we know that we can't sell airplanes for cash, so we have a greater liability. I would hope that as an individual, you could simply say "hey, all seemed good to me"and that you went straight to the bank, deposited the money and filled out the forms.

If you took a suitcase full of $100's from Juan Valdez, didn't close through a title company, and then put the cash in your safe... you might end up in prison.

By the way, when you close through a title company and the buyer pays cash, they are required to contact the submitting bank under KYC (Know Your Customer) and verify that the funds appear legitimate, the biggest concern is that those funds have been in that bank account for an extended period of time and were not recently transferred in, especially from outside the US. All of these laws are referred to as AML (anti-money laundering) they've been on the books for a long time, but were really strengthened through the Patriot Act.

When we say "cash" it's very different to take currency, as long as it's a cashier's check or wire transfer you're probably ok. I'd avoid brown paper sacks of $5's, $10's and $20's and obviously the $100 is prominent because of bulk.

Lurking, non-aviator here, with a naïve question:
When I buy a car, I owe sales tax to the state I title it in. Is there any similar sales tax hook on buying an airplane?

Yes. There are some ways around it, but in general it applies across the board. On top of that, many states have a "use tax", like property tax. Here in CA, it's about 1-1.5% of purchase price yearly. They send out an assessment form each year where they fish for new avionics or engine overhauls that increase the value.

Yes, it varies greatly from state to state, but in most states you have to pay sales tax. The funny thing is, in some states it's low... 2-3% and in some states it's high, even higher than automobiles. 7-8.75%

It's important to have a sales tax strategy, in some states there's a casual exemption, that if met negates sales tax. In most states you can "trade-in" your airplane and only pay the difference. There are also some really sharp guys, here on Beechtalk who can establish a lease-back arrangement where you pay sales tax on the hourly use of the aircraft instead of all up front.

Yes. There are some ways around it, but in general it applies across the board. On top of that, many states have a "use tax", like property tax. Here in CA, it's about 1-1.5% of purchase price yearly. They send out an assessment form each year where they fish for new avionics or engine overhauls that increase the value.

Unfortunately, this is a huge grey area, there isn't a dollar amount, but $5M certainly attracts a lot more attention than $50k

The idea is that you, as the seller, have a responsibility to report anything that seems suspicious, I'm not sure how they look at it when you are the owner of the airplane. As professionals engaged in buying and selling airplanes, we know that we can't sell airplanes for cash, so we have a greater liability. I would hope that as an individual, you could simply say "hey, all seemed good to me"and that you went straight to the bank, deposited the money and filled out the forms.

If you took a suitcase full of $100's from Juan Valdez, didn't close through a title company, and then put the cash in your safe... you might end up in prison.

By the way, when you close through a title company and the buyer pays cash, they are required to contact the submitting bank under KYC (Know Your Customer) and verify that the funds appear legitimate, the biggest concern is that those funds have been in that bank account for an extended period of time and were not recently transferred in, especially from outside the US. All of these laws are referred to as AML (anti-money laundering) they've been on the books for a long time, but were really strengthened through the Patriot Act.

When we say "cash" it's very different to take currency, as long as it's a cashier's check or wire transfer you're probably ok. I'd avoid brown paper sacks of $5's, $10's and $20's and obviously the $100 is prominent because of bulk.

There's a big difference between:

"Cash": I have a suitcase full of 20s.

And:

"Cash": I can wire the money from my account to your account.

The first is reportable by the receiver, the second not from what I understand since the bank system does that for you in the second case (or whatever law they have to follow).

The word "cash" thus has different meanings that can get confused.

Mike C.

No! I bet the FBI is going nuts with crypto-currency!

Thanks for clarification!

Interesting factoid: Selling an airplane for cash and not reporting it to the FBI is presumed money laundering and will land you in a federal penitentiary for 5 years.