We are getting a pre-buy organized for a plane and have been talking price with the seller. His requirement, for tax purposes, is that the agreed price be paid in cash when we pick the plane up, or in cashier's checks that are for no greater than $10k each. With an 80k plane, this means 8 cashier's checks for $10k each.

Should we be concerned about anything here? The seller has been very honest and seems like a genuine guy; his stated reasons are tax-related. We have the amount in our savings account, but how do you withdraw 80k in cash? Is this a pretty normal thing in the world of aircraft sales?

Ask Joe Stancil

If you go the cash route you would have to let the bank know a few weeks in advance so they can order the money. I would probably go with checks just in case something happened to you or whatever you are carrying the money in somewhere between the bank and transaction. The bank told me any withdraw or deposit greater then 10k requires paperwork (I'm assuming so the government can watch you and make sure your not dealing drugs, arms, robbing a bank?) As far as his motives, I don't know,but a brown bag of 80k is going to look funny to a cop who pulls you over for for that taillight being out.....

denalipilot wrote:Ask Joe Stancil

indeed.

He would actually want 9 cashiers checks because at 10k, the bank is mandated to notify the Feds.

When he says "tax-related," he really means cheat. I'm not sure about you, but $80k is a bunch of cash to walk around with... And getting nine cashiers checks sure is suspect... Does he also want you to go to nine different banks so no one gets suspicious???

Me... I would NEVER buy anything that expensive w/out using an escrow account. Proper bill of sale, proper P&S, etc, etc, etc... Once the paperwork is signed, a quick call to the escrow agent and his cash is released. Both parties are protected.

If they guy digs his heals in, I might walk away.

merrymunks wrote:Should we be concerned about anything here?

Yes. At least with the multiple small checks. You don't want to be part of that.

He's trying to avoid the requirement the banks have to report transactions over 10K. The government views this willful act of sidestepping federal law as illegal.

On the other hand there is nothing illegal about using cash as far as I know. It has it's disadvantages ... like your personal safety should someone find out you are carrying it... and your bank will report the transaction to the feds (as it is over 10K). The seller might run afoul of the law if he breaks it into small transactions to deposit it into his bank, but that's him going to jail, not you. Still, taking this risk has no reward for you. I wouldn't do it.

As stated above.. an Escrow Account is the proper way to handle large sums of money, imo.

Bigrenna wrote:

denalipilot wrote:Ask Joe Stancil

indeed.

He would actually want 9 cashiers checks because at 10k, the bank is mandated to notify the Feds.

When he says "tax-related," he really means cheat. I'm not sure about you, but $80k is a bunch of cash to walk around with... And getting nine cashiers checks sure is suspect... Does he also want you to go to nine different banks so no one gets suspicious???

Me... I would NEVER buy anything that expensive w/out using an escrow account. Proper bill of sale, proper P&S, etc, etc, etc... Once the paperwork is signed, a quick call to the escrow agent and his cash is released. Both parties are protected.

If they guy digs his heals in, I might walk away.

I think this is great advice. Sometimes I have not taken it myself and I have been lucky up to now, but do you really want the hassle? It would take one bad deal to end my flying career. Lots of airplanes out there.

It's also possible he is not reporting the entire selling price to avoid capital gains issue, if he bought the plane for a significantly less price. The 10K limit is for the bank, they must report any transaction over 10k. I bought my first plane for 8K, sold it for 23K 25 years later. That cost me a lot of tax...

I read about a guy who was taking $20,000 in cash to purchase some equipment. TSA selected him for screening, and they found the cash. Other agencies were called in, and he was detained, questions, and eventually arrested – all without any evidence of wrong-doing besides the "large amount of cash" in his possession. Eventually, he was released (took several weeks), but the money was confiscated under provisions the RICO Act, and he never got it back.

Earlier this week, my wife and I took $2,000 in cash to the bank to deposit. It was all in $5 bills. She sets aside every $5 bill she received in change, and it goes into her "piggy bank" for vacations, or other "special purchases"... We were surprised to learn that the bank was required to see her driver's license, and record that info along with the deposit, so it would be reported to the Feds... We were told that this is a fairly new requirement for any deposits over $1,000. So is your seller now going to want 80+ separate cashier's checks, each for <$1,000?

There is no way in heck that I would take that money to him in cash. I would offer to wire transfer it bank-to-bank, or to pay him with a single cashier's check for the entire amount. If "cash" or "8-9 cashier's checks of less than $10K each" are the only way he'll close the deal, it would be enough to make me walk away. The possibility that there is something nefarious going on is just too high in my book. There are other airplanes whose sellers aren't trying to dodge the Treasury Department...

JP256 wrote:
There is no way in heck that I would take that money to him in cash. I would offer to wire transfer it bank-to-bank, or to pay him with a single cashier's check for the entire amount. If "cash" or "8-9 cashier's checks of less than $10K each" are the only way he'll close the deal, it would be enough to make me walk away. The possibility that there is something nefarious going on is just too high in my book. There are other airplanes whose sellers aren't trying to dodge the Treasury Department...

I agree. If he wants to commit some form of tax evasion so be it but I certainly wouldn't be part of it.

The more I think about this the more it smells bad. By agreeing to do the multiple cheques you are basically becoming a part of his scheme. Nothing illegal about cash, but lots of risk. Google civil forfeiture for some nightmare tales.

The only way I would purchase would be with an electronic transfer between banks. If he doesn't like it, WALK! No, RUN!
Charles

When I bought my RV-4 the seller wanted cash only, so. I gave my bank some notice to gather up the cash. After the prebuy the seller and I drove down to my bank where we wrote up a purchase agreement and I had the bank count out $65k cash in front of the seller. My banker put the cash in a bank bag, handed it to me and I handed it to the seller, all in the bank. What the seller did with the cash was up to him from that point and not my problem.

Another vote for escrow account. They are really good at what they do and most of the aircraft-specific ones make the process easy.

Also, if you haven't already, have a title search done on the aircraft. It usually only costs about ~$75. Old liens have a way of sticking to aircraft.

Sounds like a job for bitcoin, though I don't personally deal with the stuff.

Iron74 wrote:When I bought my RV-4 the seller wanted cash only, so. I gave my bank some notice to gather up the cash. After the prebuy the seller and I drove down to my bank where we wrote up a purchase agreement and I had the bank count out $65k cash in front of the seller. My banker put the cash in a bank bag, handed it to me and I handed it to the seller, all in the bank. What the seller did with the cash was up to him from that point and not my problem.

Seems like a common sense approach, never thought of doing a cash transaction that way and both parties get what they want. Can't blame the guy for trying to dodge some tax as long as it doesn't cause the buyer any grief.

Did the plane appreciate a lot for the seller? If not, and he is selling for the same or less, and it was a non deductible toy for him, he isn't beating the gov't out of anything. Usually the guy buying it wants the plane to look as cheap as possible for tax reasons.

Banks are required to report 10k or more in cash, they don’t care about checks because there is already a paper trial. If the guy wants cash just walk him into your bank and have them count it out like someone else said. I wouldn’t try and read in between the lines as to why he wants cash or cashiers checks. And I wouldn’t be too concerned about getting cashiers checks in specific amounts, there’s nothing that says you can’t do that.. it’s your money. Stop being so paranoid.

I'd consult an accountant and a banker and a lawyer in your state. Near as I can tell from a legal perspective it doesn't matter how YOU pay for it, but rather how HE deals with declaring the income, which has nothing to do with you. But if he's a crook in one area, he's undoubtably a crook in other areas too, and I'd think twice about buying an airplane from him.

On a side note, and not to be paranoid, a fair number of law enforcement agencies have decided that applying asset forfeiture laws to any large amount of cash is just good business. If law enforcement finds a large amount of cash in your possession SOME agencies, by policy, will confiscate it and make you prove you actually own it legitimately...a process that can take a year or more, plus significant legal fees. Even with a LEO ID, I'd never cary $80k of cash (travelers checks), anywhere without a lawyer handcuffed to me.

We've bought airplanes with cashiers checks, cars with personal checks, and heavy equipment with bank transfers, but I've never been asked to bring cash for a large purchase. If he has an honest airplane for an honest price, he'll take payment any legitimate way you want to offer it. If it's a hell of a good deal but you have to pay cash...well, you know what they say about a deal too good to be true...

Good luck, and remember there are LOTS of airplanes out there.

When you pay with multiple just under 10K amounts, there is an actual legal term, something like patterning or some such term (neuron not making the connection). If you participate and he gets popped, you go down as an accessory. As mentioned, get some professional advice. There can be consequences. I asked once, was advised; Don't.

I hate taxes was much as anybody, but somebody has to pay for the roads & airports. Not to mentioned the necessary limos and 747's, subs, B2's and so on. What I personally hate is these special emergency temporary tax measures. They never seem to go away, like the 1925 special manhole cover $1.50 tax on your phone bill. It has been a lengthy emergency is all I can figure, just must be hordes of folks still falling in them.

Get him $80K in gold. Easier to carry.