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were “disassociated” from the aircraft, only becoming integral to the aircraft at a later point in time. Under the prior cases cited, the parts likely would have been found exempt if they had been installed onto the engine out-of-state and then flown into California. But the exemption did not apply to aircraft parts sold in Cal- ifornia that become integral parts of the aircraft only after installation. Equipment can become part of an air- craft, as previously illustrated. But can an aircraft itself become equipment? Not in Texas, where facilities leased primarily to use for “aircraft equipment storage” are exempt from property tax. In a 2009 de- cision, ICAN Enterprise, Inc. v. Williamson County Appraisal District, the Court of Appeals of Texas held that leased aircraft hangers did not escape taxation under this exemption. The lessor argued that “aircraft” are “devices” or “vehicles” and that “devices” or “vehicles” are “equipment,” i.e. storing aircraft was the same as storing equipment. This string of

Cockpit of a Sikorsky S-92

definitions was deemed too far-reaching. An “aircraft” can be “equipment” in the ordinary sense of the word without being “aircraft equipment.” By pairing the terms “aircraft” and “storage,” according to the Court, the legislature intentionally limited the type of equipment qualifying

photo: Patrick Allen

for the exemption to equipment used to create aircraft or used in conjunction with aircraft to allow them to properly func- tion. In essence, the Court held that the sum of all essential aircraft parts is less than the whole aircraft.

Sometimes the same equipment intended for the same use can be both taxable and non-taxable. In State ex rel. Sunair Elec- tronics, Inc., a 1965 Florida appellate court decision, the Comptroller of Florida as- sessed sales tax against high frequency ra- dio equipment for use in light aircraft. The equipment was manufactured primarily for export to and use in foreign countries. The manufacturer delivered the equipment to foreign buyers either pre-installed or de- tached for later installment. The Court ad- dressed these two scenarios separately. At issue was application of the Import-Export Clause of the United States Constitution, which prohibits states from imposing du- ties on exports. The pre-installed radio equipment never entered the stream of for- eign commerce, the Court reasoned, be- cause the equipment once installed lost its identity as a shipment of tangible personal property and became an integral part of the completed aircraft. The aircraft was not a finished product until after the equipment was fully installed. The sales tax was not a tax on the export of the equipment, because the equipment, as standalone equipment, never left the country.

The detached equipment, in contrast, was placed aboard the foreign purchaser’s aircraft for shipment. It was never physi- cally attached to or made part of the air- craft before leaving the country. The lower court believed the detached equip-

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