Entering into a purchase agreement for a conceptual aircraft is a unique experience even for savvy business professionals familiar with purchase contracts. These agreements can provide a purchaser with the opportunity to potentially acquire a new aircraft in exchange for a commitment of a relatively nominal down payment. From a manufacturer’s perspective, these agreements can gage the interest of prospective purchasers and determine if there is sufficient demand for them to proceed. The aircraft manufacturer typically develops a “mock-up” and provides pre-engineered estimates of specifications before initiating the expensive and time- consuming certification process.
Electing Out of Subchapter K Provides Tax Benefits While Reducing Regulatory Cost
Aviation, legal and tax professionals have historically encouraged joint owners of aircraft to hold their respective interest in the title. The FAA has allowed for co-ownership of aircraft in its registration process, and issued interpretations as to how these aircraft may be operated. The FAA specifically allows one co-owner to provide pilot services to fellow co-owners without violating the prohibitions banning the sale of transportation services by FAR Part 91 Operators.