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The broker of the aircraft I'm purchasing does not put the purchase price in the Bill of Sales. Here's what he uses:

"The standard entry on the BOS is "$1 & OVC" which means you purchased the aircraft for "$1.00 & other values considered" It is no ones business how much you paid for the aircraft. That's why we use this method.The bill of sale ,once registered, is a public document & can be looked up by anyone."

Not such a horrible idea, but if he does that, how do I prove what I paid for it when sending in my MD Use Tax???

Most state taxing authorities will either use a "stated value" (what you say it is worth) or some form of appraisal guideline. I would just go in with a copy of your check that you paid for it with, or a copy of the purchase and sale agreement you executed between you and the seller. However, I have researched BOS's on 3 airplanes spanning 40 years in the case of the Cherokee, and it is rare to find anything past 1970 that has an actual value printed in it. $1 and OVC is the standard it seems.

The fellow that I bought my 150H from put the same thing in the BOS. A month or so later, I got a letter from the Georgia Department of Revenue (state tax people) and a form where I was to list everything that I had given the seller as "other value considered" AND it's value and send them a check to cover the tax. I filled out the form and sent the tax check but forgot to add the $1.00. They then sent me a bill for 6 cents. No questions asked about the "other value considered". All they wanted was their tax money.

My bill of sale says 1 buck and I paid cash I'm in Georgia so I guess I just wait and see when they find out about it?

Thanks all. I didn't realize that was pretty much the norm.

In Illinois they charge you what you paid or market value. Unlike the FFA who doesn't care, if you report 1+OVC they'll happily value your plane, sight unseen, and send you a bill. I was happy to tell them what I actually paid, since I think I got a deal.

The tax itself was actually a really big consideration. I calculated the max I could pay including tax. When I called to look at an airplane over my max (only when within 2k) I was honest with the owner. If he wouldn't consider my max bid, I wouldn't waste his time at the airport.

I'd also be wary of not paying the tax for insurance reasons. Many policies don't cover if you are flying in violation of any state or federal law. If a state requires registration and you purposely under report the value of your plane, one could say that your registration was fraudulent, you do not have a valid state registration, and that you are flying in violation of a state law.

Just because it doesn't usually happen, doesn't mean it can't. Especially if you've got a jerk adjuster.

I'm not saying 1+OVC isn't a valid entry on a bill of sale, just that I would honestly report the sale price to the state for tax purposes.

Now I shall await a tirade of criticism.

I fully intend to report what I paid to the state for tax purposes. I just have no proof. I looked it up though and our MD use tax form does not require a receipt. It would be wise of me to get such a receipt, but not sure if the seller with write another (non-FAA) bill of sales.

If you are using a broker, he probably has an "aircraft purchase agreement" of some kind that will establish the purchase price and terms of payment. I think AOPA may have such a form available on line.

I know pro and cons have been discussed before, but I set up a Delaware Corporation for about the same amount as sales tax would have cost me in SC ($300) and then an annual amount of about $150. No property taxes are paid in Delaware (SC property tax on aircraft and vehicles is outrageous) so I save a lot of money. Plus, if you decide to take a partner, you just sell them shares in the corporation without changing aircraft registration and possibly being subject to sales tax again. Something to think about. You can just google "delaware corporations" for more info. A couple of different companies do this.

I'd examine your local laws before taking the Delaware route. If memory serves, Illinois Use Tax applies to aircraft that are based in IL and owned by out of state corporations.

I'd bet you're fine as long as you tell them what you paid. Also - you probably paid some portion via check and/or with money loaned from a financing company. I think your cancelled check and/or financing agreement can serve as proof of the sale price.