                               Trim ATI-OISNF,Y  GENERAL
                                        OF T+ExAs
                                           Au-.       TNXAIB    rev11
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                                                  December   12. 1974

         The Honorable Robert S. Calvert                          Opinion No. H-    470
         Comptroller   of Public Accounts
         L. B. J. State Office Building                          Re: Exemption of certain
         Aurtin, Texas                                           aircraft from taxation under
                                                                 Article  20.04(Q), Taxation-
                                                                 General.

         Dear Mr.           Calvert:

                  You have submitted three questions to ua concerning the inter-
         pretation of the Limited Sales, Excise and Use Tax of Chapter 20,
         Taxation-General,   V. T. C. S., to certain types of aircraft.

                 Article  20.02, Tax. -Gen., imposes a salee tax on the receipts
         from the sale, at retail, of all taxable items and Article   20.03,
          Tax, -Gen. imposes an excise tax on the storage, me or other consump-
         tion of taxable itemr purchased, leaeed or rented from any retailer
         for storage, use or other consumption in thin State.     “Taxable items”
         are defined in Article 20.01 (WI. as tangible personal property.    Article
         20.04 deak’with    exemptions.   Paragraph (Q) provides:

                                      Certain Aircraft.   There are exempted from
                                 the taxes imposed by this Chapter the receipts
                                 from the sale, use, storage, lease or other
                                 consumption of aircraft    sold to persons using
                                 such aircraft aa certificated   or licensed car-
                                 riers of persons or property,     or aold to any
                                 foreign government of sold to persons who are
                                 not residents of this State and repair services
                                 to aircraft operated by a certificated    or licensed
                                 carrier   of persons or property.




                                                      p. 2147
The Honorable     Robert   S. Calvert     page 2 (H-470)




        Your first question is: “Is the sale of an aircraft to a person
holding an air-taxi certificate exempt within the terms of Article 20.04(Q)
above? ”

          The operation of air taxis (defined in 14 C. F. F. 5 5 298.2 and
298.3) is governed by Part 135 of Title 14, C. F. R. and Section 135.9
calls for an operating certificate.     By definition, the holders of such
certificate  are “certificated  or licensed carriers   of persons or property”
and are exempt from the taxes in question.         See  49U.S.C.A.     31424.

          Your second question asks: “Does either an air worthinees
certificate,    a certificate   of registration,   or pilots license qualify a
person to purchase an aircraft tax exempt under Article              20.04(Q)
above? ” We think not. The certificate           to which reference is made
in 20.04(Q) is a certificate       authorizing a particular use of the aircraft.
The two certificates       and the license to which you refer in the question,
on the other hand, have reference to the safety or identification             of the
aircraft and its pilot.       The air-worthiness     certificate  [49 U.S. C.A.
51423(c)] is based on a finding that the aircraft conforms to the type
certificate   issued for that plane and on a finding that the aircraft is in
condition for safe operation.

         A registration    certificate    149 U.S. C.A. $14031, is evidence of
ownership.     The  pilots  license    is governed by 49 U. S. C. A~. 9 1422 and
ia issued only if it is found that the pilot is, in fact, competent and
physically able to serve as an airman.           See
                                                 -    14 C. F. R. $61.1 et seq.

        In our opinion Article 20.04(Q) was designed, inter alia, to exempt
from taxation receipts from certain uses of the aircraft.   Certificates
about which you inquired refer to the character of the vehicle and its
pilot and are irrelevant  to a determination of exemption under Article
20.04(Q).


         Your third question asks whether the purchaser of the aircraft
loses the exemption when the aircraft is used at a flight training school
for training purposes.




                                        p. 2148
,
    The Honorable   Robert    S. Calvert     page 3       (H-470)




              The exemption granted in Article    20.04(Q) does not speak to
     multiple use. However,     it is generally held that the primary,   as
    distinguished    from the incidental use    of the property determines
    whether it is exempt from taxation.       General Data Corp. v. Porter-
    fieid,   257 N. E. 2d 359 (Ohio 1970); Mead Corp. v. Glander,      93 N. E.
    2d 19 (Ohio 1950); Heller v. Fergus Ford, Inc., 305 N. E. 2d 352 (Ill.
    App. 4th Div. 1973); cf. Hilltop Village, Inc, v, Kerrville      Independent
    School District,    426 KW. 2d 943 (Tex. 1968).

              Therefore,   the tax exempt status of an aircraft used as a
    certificated   or licensed carrier of persons or property and also used
    for flight instruction will depend on the facts of each case.    If the non-
    exempt use is merely incidental, it will not destroy the exemption.

                                        SUMMA-R       Y

                         An air-taxi operator,    certified as such by the
                    Federal Civil Aeronautics      Board, is a certificated
                    carrier of persons or property and thus exempt from
                    taxation under Article 20.04(Q),        Taxation-General.
                    The exemption will not be destroyed by an incidental
                    non-exempt use. Possession          of an air-worthiness
                    certificate,   a certificate of registration    or a pilot’s
                    license, without more, is insufficient to establish




                                                                    -B&
                    an exemption.




    ri_
                                                      flVery    truly yours,


                                                          JOHN L. HI L
                                                          Attorney General     of Texas
          OVED:


                        LL,    First   Assistant


    C. ROBERT HEATH,          Chairman
    Opinion Committee




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