Sec. 1103. TREATMENT OF FRACTIONAL AIRCRAFT OWNERSHIP PROGRAMS

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## SEC. 1103 TREATMENT OF FRACTIONAL AIRCRAFT OWNERSHIP PROGRAMS ###

(a)Fuel Surtax ####

(1)In general Subchapter B of chapter 31 is amended by adding at the end the following new section: > > ## “SEC. 4043 SURTAX ON FUEL USED IN AIRCRAFT PART OF A FRACTIONAL OWNERSHIP PROGRAM > > **[**[26 U.S.C. 4043](/us/usc/t26/s4043)**]** > > > ### “(a) In General > > There is hereby imposed a tax on any liquid used (during any calendar quarter by any person) in a fractional program aircraft as fuel— > > > #### “(1) > > for the transportation of a qualified fractional owner with respect to the fractional ownership aircraft program of which such aircraft is a part, or > > > #### “(2) > > with respect to the use of such aircraft on account of such a qualified fractional owner, including use in deadhead service. > > > ### “(b) Amount of Tax > > The rate of tax imposed by subsection

(a)is 14.1 cents per gallon. > > > ### “(c) Definitions and Special Rules > > For purposes of this section— > > > #### “(1) Fractional program aircraft > > The term ‘fractional program aircraft’ means, with respect to any fractional ownership aircraft program, any aircraft which— > > > ##### “(A) > > is listed as a fractional program aircraft in the management specifications issued to the manager of such program by the Federal Aviation Administration under subpart K of part 91 of title 14, Code of Federal Regulations, and > > > ##### “(B) > > is registered in the United States. > > > #### “(2) Fractional ownership aircraft program > > The term ‘fractional ownership aircraft program’ means a program under which— > > > ##### “(A) > > a single fractional ownership program manager provides fractional ownership program management services on behalf of the fractional owners, > > > ##### “(B) > > there are 1 or more fractional owners per fractional program aircraft, with at least 1 fractional program aircraft having more than 1 owner, > > > ##### “(C) > > with respect to at least 2 fractional program aircraft, none of the ownership interests in such aircraft are— > > > ###### “(i) > > less than the minimum fractional ownership interest, or > > > ###### “(ii) > > held by the program manager referred to in subparagraph (A), > > > ##### “(D) > > there exists a dry-lease aircraft exchange arrangement among all of the fractional owners, and > > > ##### “(E) > > there are multi-year program agreements covering the fractional ownership, fractional ownership program management services, and dry-lease aircraft exchange aspects of the program. > > > #### “(3) Definitions related to fractional ownership interests > > > ##### “(A) Qualified fractional owner > > The term ‘qualified fractional owner’ means any fractional owner which has a minimum fractional ownership interest in at least one fractional program aircraft. > > > ##### “(B) Minimum fractional ownership interest > > The term ‘minimum fractional ownership interest’ means, with respect to each type of aircraft— > > > ###### “(i) > > a fractional ownership interest equal to or greater than 1/16 of at least 1 subsonic, fixed wing, or powered lift aircraft, or > > > ###### “(ii) > > a fractional ownership interest equal to or greater than 1/32 of at least 1 rotorcraft aircraft. > > > ##### “(C) Fractional ownership interest > > The term ‘fractional ownership interest’ means— > > > ###### “(i) > > the ownership of an interest in a fractional program aircraft, > > > ###### “(ii) > > the holding of a multi-year leasehold interest in a fractional program aircraft, or > > > ###### “(iii) > > the holding of a multi-year leasehold interest which is convertible into an ownership interest in a fractional program aircraft. > > > ##### “(D) Fractional owner > > The term ‘fractional owner’ means any person owning any interest (including the entire interest) in a fractional program aircraft. > > > #### “(4) Dry-lease aircraft exchange > > The term ‘dry-lease aircraft exchange’ means an agreement, documented by the written program agreements, under which the fractional program aircraft are available, on an as needed basis without crew, to each fractional owner. > > > #### “(5) Special rule relating to use of fractional program aircraft for flight demonstration, maintenance, or training > > For purposes of subsection (a), a fractional program aircraft shall not be considered to be used for the transportation of a qualified fractional owner, or on account of such qualified fractional owner, when it is used for flight demonstration, maintenance, or crew training. > > > #### “(6) Special rule relating to deadhead service > > A fractional program aircraft shall not be considered to be used on account of a qualified fractional owner when it is used in deadhead service and a person other than a qualified fractional owner is separately charged for such service. > > > ### “(d) Termination > > This section shall not apply to liquids used as a fuel in an aircraft after September 30, 2021.” > . ####

(2)Conforming amendment **[**[26 U.S.C. 4082](/us/usc/t26/s4082)**]** Subsection

(e)of section 4082 is amended by inserting “(other than kerosene with respect to which tax is imposed under section 4043)” after “In the case of kerosene”. ####

(3)Transfer of revenues to airport and airway trust fund Paragraph

(1)of section 9502(b) is amended by redesignating subparagraphs

(B)and

(C)as subparagraphs

(C)and (D), respectively, and by inserting after subparagraph

(A)the following new subparagraph: > > ##### “(B) > > section 4043 (relating to surtax on fuel used in aircraft part of a fractional ownership program),” > . ####

(4)Clerical amendment The table of sections for subchapter B of chapter 31 is amended by adding at the end the following new item:" “Sec. 4043. Surtax on fuel used in aircraft part of a fractional ownership program.” ". ###

(b)Fractional Ownership Programs Treated as Non-commercial Aviation **[**[26 U.S.C. 4083](/us/usc/t26/s4083)**]** Subsection

(b)of section 4083 is amended by adding at the end the following new sentence: “Such term shall not include the use of any aircraft before October 1, 2015, if tax is imposed under section 4043 with respect to the fuel consumed in such use or if no tax is imposed on such use under section 4043 by reason of subsection (c)(5) thereof.”. ###

(c)Exemption From Tax on Transportation of Persons Section 4261, as amended by this Act, is amended by redesignating subsection

(j)as subsection

(k)and by inserting after subsection

(i)the following new subsection: > > ### “(j) Exemption for Aircraft in Fractional Ownership Aircraft Programs > > No tax shall be imposed by this section or section 4271 on any air transportation if tax is imposed under section 4043 with respect to the fuel used in such transportation. This subsection shall not apply after September 30, 2015.” > . ###

(d)Effective Dates ####

(1)Subsection

(a)**[**[26 U.S.C. 4043 note](/us/usc/t26/s4043)**]** The amendments made by subsection

(a)shall apply to fuel used after March 31, 2012. ####

(2)Subsection

(b)**[**[26 U.S.C. 4083 note](/us/usc/t26/s4083)**]** The amendment made by subsection

(b)shall apply to uses of aircraft after March 31, 2012. ####

(3)Subsection

(c)**[**[26 U.S.C. 4261 note](/us/usc/t26/s4261)**]** The amendments made by subsection

(c)shall apply to taxable transportation provided after March 31, 2012.

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