We also act as qualified intermediary and exchange accommodation titleholder for personal property exchanges, such as aircraft, equipment, businesses, boats, artwork, and other collectibles. Personal property exchanges are similar to real property exchanges, but require care with respect to sales and use tax and other issues. We work with your local sales tax advisor to determine the best state and local tax approach.
Aircraft has often been fully depreciated for federal tax purposes. Thus, when it is sold, the entire sales price will be taxable gain, and most or all of the gain will be taxed at higher ordinary income rates. Therefore, an exchange of the aircraft can defer substantial taxes. We act as both qualified intermediary in forward exchanges and exchange accommodation titleholder in reverse exchanges of aircraft. The safe harbor created by the IRS allows us to hold title to either the relinquished aircraft or the replacement aircraft for up to 180 days while the client locates a buyer for the relinquished aircraft. We work with the client’s counsel to minimize federal income taxes as well as state sales and use taxes on these transactions. For example, in some states, a forward or reverse exchange may be structured as a trade-in to obtain a credit against sales and use taxes.
Our affiliate, EPC Aircraft Sales LLC, a Washington limited liability company, specializes in exchanges of commercial and corporate aircraft. It is registered as a dealer with the FAA, and is also registered with the Capetown Registry.
Artwork and Collectible Exchanges
We specialize in exchanges of artwork and other collectibles held for investment. The artwork or collectibles can be sold through dealers or auction houses. The exchanges can be structured as either forward or reverse exchanges, and we work with local counsel to minimize sales and use taxes on the artwork and collectible exchanges.