Nacg Leasing v. Department of Treasury, 495 Mich. 26

NACG Leasing v Department of Treasury challenged a Michigan use tax on a 5-year aircraft lease; tax assessed on the lease, not purchase, transaction.
Aircraft purchased by NACG Leasing was immediately leased to another company that already possessed it; lessee had control during the lease.
Tax Tribunal upheld the use tax; Court of Appeals reversed in an unpublished per curiam opinion (Docket No. 306773).
Supreme Court granted leave to address whether a lease enacted in Michigan constitutes use under the Use Tax Act (UTA) when the lessor does not obtain possession.
Court holds that executing a lease in Michigan is an exercise of ownership rights and constitutes use under the UTA; remands for consideration of the alternative challenge to the amount assessed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does a Michigan lease execution constitute use under the UTA?	NACG contends no use without possession in Michigan.	Treasury argues use occurs with possession transfer or control exercised in Michigan.	Yes; lease execution constitutes use.
Is possession transfer required to constitute use under the UTA?	Use can occur through relinquishing control via lease.	Use requires possession transfer.	No; possession transfer not required; lease itself satisfies use.
Should the case be remanded for the tax amount adjudication?	Challenge to the amount should be litigated.	Issue preserved for Tax Tribunal review.	Remand to Court of Appeals to consider the alternative challenge to the amount.

WPGP1, Inc v Dep’t of Treasury, 240 Mich App 414 (2000) (out-of-state control precedent on use tax for aircraft)
Czars, Inc v Dep’t Treasury, 233 Mich App 632 (1999) (relinquishment of control and use tax implications)
Mich Bell Tel Co v Dep’t of Treasury, 445 Mich 470 (1994) (possession concepts in use tax context)
Daugherty v Thomas, 174 Mich 371 (1913) (ownership rights and use rights principles)