Aviation write-off questions?

BellyUpFish

BellyUpFish

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Hypothetical:

Part time job flying a Garmin 430 equipped bird.

Could I legally write off a Garmin 430 in my own aircraft to maintain proficiency?

Anyone?
 
Talk to a CPA.

If you're not in the industry, or a CPL, I'd wager not.
 
I no longer earn my living flying. I earn supplemental income flying as a professional pilot.

I'm also a CFI, albeit very limitedly, actively instructing just isn't worth the hassle for me at the present time.

I'm flying a Cheyenne part 91 for the owner. I'm receiving a 1099 for "pilot services."

I also own my own aircraft and have been thinking about upgrading to a Garmin 430 and was thinking it might be deductible, I know headsets and other "remaining current" items can be.

I'll talk it over with a CPA.
 
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What you're likely trying to do is qualify this as an education expense. The first argument you'd have to make is "Is it to maintain or improve your skills?" I suspect you can probably make the answer that it is yes. This is not something you need to meet the minimum job qualifications nor is it something that trains you for a new job.

However, the problem is that buying the unit wouldn't seem to be an allowable education expense. Buying a training course would be, training materials would be, perhaps even the costs of operating the aircraft would be, but the capital costs of the unit...I'd tend to doubt it.
 
I'll let a tax professional field the question, but I'm thinking you're probably right.
 
I hold an Enrolled Agent certificate from the treasury department, but I'm not actively practing right now, so consult an EA or CPA, don't take my word for this.

This question comes up a lot when doing taxes for pilots. In general equipment and training required to keep the job you already have would be allowed as a schedule C expense against 1099 income. Probably not against W2 income.

If you also fly for strictly personal purposes then a picky auditor might want you to prorate your expenses proportionally.

I don't think buying a Garmin 430 in your personal airplane would qualify as a deductible expense.

Buying the excellent Ditmar GPS guide would.

Airplanes, boat, and horse related expenses are audit bait. That doesn't mean you should not take expenses to which you are entitled under the Revenue Code, but it does mean that good documentation and the help of a professional will go a long way in minimizing IRS aggravations in your life.
 
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On the other hand....if you think it is a justified expense go ahead, afterall what are the chances that someone on this board will turn you in :nono:
 
Well that's a bummer.. I'll let my CPA think about it, but I appreciate the discussion.
 
Of course you could bring a DSLR with you, take a few shots of one property or two and try to sell them after the flight.
 
BellyUpFish said:
Well that's a bummer.. I'll let my CPA think about it, but I appreciate the discussion.
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Depending on your percentage of business use of your airplane, this may be a capitalized asset that should be depreciated over time (subject to the benefits of Sec. 179 or bonus depreciation [ways to rapidly expense the cost of fixed assets]). Definitely talk to your CPA.
 
BellyUpFish said:
I no longer earn my living flying. I earn supplemental income flying as a professional pilot.

I'm also a CFI, albeit very limitedly, actively instructing just isn't worth the hassle for me at the present time.

I'm flying a Cheyenne part 91 for the owner. I'm receiving a 1099 for "pilot services."

I also own my own aircraft and have been thinking about upgrading to a Garmin 430 and was thinking it might be deductible, I know headsets and other "remaining current" items can be.

I'll talk it over with a CPA.
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I have a situation where I can write off part of my house as a home office business expense and I don't do it. As my accountant put it to me:

A.) You're opening the door for an audit

B.) You're going to get hit with a capital gains tax when you sell..

He had me at A.... having been through one of these, I would prefer oral surgery with no anesthesia than doing that again...
 
What about opening up a LLC, and putting the plane under that, deducting the depressant ion against your individual W2 income, as well as the 430 etc?
 
James331 said:
What about opening up a LLC, and putting the plane under that, deducting the depressant ion against your individual W2 income, as well as the 430 etc?
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That simply makes it a more obvious red flag for the IRS. You cannot run a business as a hobby and take tax deductions. Even if you make some token effort to call it a business, it won't work.

For example, you cannot buy a bunch of model trains, put them under a "Joe's Model Trains LLC" and deduct all the cost paid to acquire your toys under the premise that you give tours of your setup. Similarly you cannot open "Joe's catering service" and then deduct the cost of every grocery trip you make as part of a very unsuccessful business.

Bottom line: The IRS isn't completely stupid. They've seen every trick in the book.

http://www.irs.gov/uac/Business-or-Hobby?-Answer-Has-Implications-for-Deductions

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.​
 
BellyUpFish said:
Hypothetical:

Part time job flying a Garmin 430 equipped bird.

Could I legally write off a Garmin 430 in my own aircraft to maintain proficiency?

Anyone?
Click to expand...

I'm not a CPA, you'd have to get a qualified answer from a qualified tax accountant.

I understand that you're flying someone else's airplane for work and want to put a 430 in your airplane and then fly it to maintain proficiency. I think the answer might be yes, you could take a deduction on it, but it's a heavily qualified yes. In other areas where there is a shared private/business usage, you have to track usage time for each and then divide the time out. That is further qualified that only the time you spend specifically flying for proficiency could be counted. Your $100 hamburger could not be counted because you had a private reason for performing the trip, you'd pretty much have to do nothing but proficiency for the purpose of work. That's a high bar to prove and if the IRS later disagrees with you, at a minimum you're liable for the fines or potentially jail time.

On the plus side, you could take the deduction on not just your 430, but your entire airplane. You'd probably have to cost the 430 into the cost of the airplane, then add hours to determine how much of the airplane is used for work vs pleasure and divide the depreciation cost between the two. Negative when you sell the airplane, you be liable for recapturing the cost of that depreciation and having to pay taxes on it, potentially to the tune of tens of thousands of dollars.

All this is incredibly difficult to compute and write up and I suspect you'd spend more in prep fees that you'd ever save from tax deductions.

Example numbers -

You airplane is worth 75,000 today. You add a 430 to it and estimate it is now worth 79,000. You set up a 20 year depreciation schedule and depreciate it at 3,950/year. Each year for 5 years you fly 10% heavily documented time of proficiency for your work. You can take 10% of 3,950 or 395 as a deduction. This will save you in the neighborhood of $120 in taxes each year for 5 years. It probably costs you $100 each year to file these taxes and you still have liability if you sell the airplane before the depreciation is up.

If you wanted to just take depreciation on the 430, the process is similar but you definitely won't recoup the cost of filing. The annual depreciation value of a 430 after splitting between business/pleasure and then the (presumed 35%) tax rate, you're not getting that much each year.

Again - I'm guessing, but I think this is the basic idea of how it works.

dukeblue219 said:
You cannot run a business as a hobby and take tax deductions. Even if you make some token effort to call it a business, it won't work.
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Actually you can. But it has to be a legitimate business, not a hobby that you call a business.
 
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BellyUpFish said:
Hypothetical:

Part time job flying a Garmin 430 equipped bird.

Could I legally write off a Garmin 430 in my own aircraft to maintain proficiency?

Anyone?
Click to expand...

Can you? Of course, will they call you on it? Maybe, can you defend it? Depends on several factors, but possible under the right circumstances.
 
bflynn said:
I'm not a CPA, you'd have to get a qualified answer from a qualified tax accountant.

I understand that you're flying someone else's airplane for work and want to put a 430 in your airplane and then fly it to maintain proficiency. I think the answer might be yes, you could take a deduction on it, but it's a heavily qualified yes. In other areas where there is a shared private/business usage, you have to track usage time for each and then divide the time out. That is further qualified that only the time you spend specifically flying for proficiency could be counted. Your $100 hamburger could not be counted because you had a private reason for performing the trip, you'd pretty much have to do nothing but proficiency for the purpose of work. That's a high bar to prove and if the IRS later disagrees with you, at a minimum you're liable for the fines or potentially jail time.

On the plus side, you could take the deduction on not just your 430, but your entire airplane. You'd probably have to cost the 430 into the cost of the airplane, then add hours to determine how much of the airplane is used for work vs pleasure and divide the depreciation cost between the two. Negative when you sell the airplane, you be liable for recapturing the cost of that depreciation and having to pay taxes on it, potentially to the tune of tens of thousands of dollars.

All this is incredibly difficult to compute and write up and I suspect you'd spend more in prep fees that you'd ever save from tax deductions.

Example numbers -

You airplane is worth 75,000 today. You add a 430 to it and estimate it is now worth 79,000. You set up a 20 year depreciation schedule and depreciate it at 3,950/year. Each year for 5 years you fly 10% heavily documented time of proficiency for your work. You can take 10% of 3,950 or 395 as a deduction. This will save you in the neighborhood of $120 in taxes each year for 5 years. It probably costs you $100 each year to file these taxes and you still have liability if you sell the airplane before the depreciation is up.
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In place of a straight line depreciation, why not an accelerated cost recovery and get the maximum write-off in three years..

Also, something else to consider... with ADS-B coming on you may want to consider going for the whole enchilada and getting the Garmin ADS-B add-on.
 
dukeblue219 said:
That simply makes it a more obvious red flag for the IRS. You cannot run a business as a hobby and take tax deductions. Even if you make some token effort to call it a business, it won't work.

For example, you cannot buy a bunch of model trains, put them under a "Joe's Model Trains LLC" and deduct all the cost paid to acquire your toys under the premise that you give tours of your setup. Similarly you cannot open "Joe's catering service" and then deduct the cost of every grocery trip you make as part of a very unsuccessful business.

Bottom line: The IRS isn't completely stupid. They've seen every trick in the book.

http://www.irs.gov/uac/Business-or-Hobby?-Answer-Has-Implications-for-Deductions

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.​
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That was one heck of a autocorrect lol

So even as a ATP, if I started a scenic tour / photography biz on the side, if I'm not making good profits I'm going to get audited?

I'd think they would be auditing every startup for the first couple years in that case.
 
James331 said:
That was one heck of a autocorrect lol

So even as a ATP, if I started a scenic tour / photography biz on the side, if I'm not making good profits I'm going to get audited?

I'd think they would be auditing every startup for the first couple years in that case.
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As a business you can show a loss for three years...

Speaking from my own experience, my first year as an independent contractor I showed a loss, the second year a little profit, the third year I hit it out of the park.

When I had my "IRS Full Rectal Examination" it was becasue I went from zero business deductions one year to a five figure write-off the next year. Also I did my own returns. Just make sure you have a CPA sign off on your tax return... This may keep that from happening..
 
James331 said:
That was one heck of a autocorrect lol

So even as a ATP, if I started a scenic tour / photography biz on the side, if I'm not making good profits I'm going to get audited?

I'd think they would be auditing every startup for the first couple years in that case.
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Even as a CP with a plane and doing part time photo work, I never got audited. I rented the plane to myself for doing the photo work though to greatly simplify, and increase, the return without raising flags. I was told by a CPA in the Aviation field that that was the best way to go about it was charge a fair market value for rent, that way I didn't have to calculate all the business/personal differences in trying to write about off the plane expenses.

If you do fly for filed income as a contract on demand pilot, then you can rent yourself the plane for those flights required to maintain currency and proficiency. If you stay around 2 hours a month of that, the IRS shouldn't blink.

Note, the rules may have changed since then, it's been a while.
 
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topsail said:
Just say no. Its not worth the potential pain.
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True! BUT, you can "write off" whatever you want, it's just how well can you explain and justify it when they send you that letter! :yikes: My CPA is pretty clear that very little aviation related is a business or personal deduction for me. Airplanes and boats seem to raise the red flags with our friends at the IRS, I really don't want to talk to them if I don't have to. :D
 
Almost certainly not, but you need to talk to an aviation-knowledgeable tax professional to be sure. However, you might want to read the AOPA's tax guide to get you started -- begin with Aircraft Expenses in Part 1.
 
N747JB said:
True! BUT, you can "write off" whatever you want, it's just how well can you explain and justify it when they send you that letter! :yikes: My CPA is pretty clear that very little aviation related is a business or personal deduction for me. Airplanes and boats seem to raise the red flags with our friends at the IRS, I really don't want to talk to them if I don't have to. :D
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Business 'entertainment' on the boat is most definitely a write off though. Again find the market charter rate and rent it to your business is the simplest way to do it.
 
topsail said:
Just say no. Its not worth the potential pain.
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BS!

Are you a patriot?

It's your duty to prevent those commie a holes from squandering any more of your money then you can prevent.

As it stands you are a slave for 1 out of every 4 hours you work, and what do you have to show for it? Larger government? Less freedoms? Killing more foreign folks?

Take what ever you can, starve the beast, enjoy more of YOUR hard earned money.
 
James331 said:
BS!

Are you a patriot?

It's your duty to prevent those commie a holes from squandering any more of your money then you can prevent.

As it stands you are a slave for 1 out of every 4 hours you work, and what do you have to show for it? Larger government? Less freedoms? Killing more foreign folks?

Take what ever you can, starve the beast, enjoy more of YOUR hard earned money.
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Commie? :rofl::rofl::rofl::rofl: The purpose of welfare and government spending is all about capitalism. Nobody on welfare is saving a dime, they spend it all. The Military does not hoard money, they spend it all. The only people who get ahead is the financial industry, just look at the markets. The only people hoarding cash is the Federal Reserve, they are holding half the QE cash they created and charged us for issuing it and continue to charge us interest for holding on to it which they give part of to the banks that they issued it to, who agreed to give it back.

Look at our stock markets, how can you even imagine anything communist in this country?
 
Take my money and give to folks that don't want to work = commie.

But I'll stop right there before we get deep into the spin zone :D
 
James331 said:
Take my money and give to folks that don't want to work = commie.

But I'll stop right there before we get deep into the spin zone :D
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Take money and give to folks who don't work from people who do so they can give it to people who are so rich they don't work, that's capitalism.
 
James331 said:
That was one heck of a autocorrect lol

So even as a ATP, if I started a scenic tour / photography biz on the side, if I'm not making good profits I'm going to get audited?

I'd think they would be auditing every startup for the first couple years in that case.
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As that new business gets into year 4, yes, they will most likely be audited. You cannot lose money indefinitely anymore. Well, you can, but you'll have to explain how it's being funded if you continually lose money. You'll also have to explain how you justify it as a business and not a hobby. Those things are possible, but not simple.
 
If you are flying and can't find a reason to write off capital expenses you shouldn't worry about it. And to the guy that said you would have gains tax if you can find a way to do that you should be happy to pay.

Over 50% of my flying I make an excuse to stop and buy lunch for someone related to my business.

10yrs more than a dozen planes and over $30K per year in deductions all in.

I've been audited twice once in person. Once I walked away with more than I started with. The only thing to fear is if you are lying. Soon as you push back they usually cave.

This year they disallowed mortgage deductions for loans I've had for over 15 years. I sent them a bill for my accountants research on the matter got an apology within 48 hours.
 
tlrussell said:
Over 50% of my flying I make an excuse to stop and buy lunch for someone related to my business.
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You're right, maybe next trip I'll tell the owner he's going to be just a touch late, because I need to stop and buy lunch for someone, so I can make the trip he's paying me to fly deductible. ;)

I'm sure that would solve most of my "aviating for hire" issues on this aircraft for sure.
 
Henning said:
Take money and give to folks who don't work from people who do so they can give it to people who are so rich they don't work, that's capitalism.
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Ether way, if people think that taking 25% of your income that you could and probably would spend in your local economy, and sending it to the IRS is part of the solution, instead of the problem, well they are the reason we're up the creek we are up.
 
James331 said:
Ether way, if people think that taking 25% of your income that you could and probably would spend in your local economy, and sending it to the IRS is part of the solution, instead of the problem, well they are the reason we're up the creek we are up.
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But people weren't spending it, they were saving it, and the poor had nothing to spend. Savings is not what the markets want to see. You don't give your money TO the IRS, you put it back into the financial system, it never stops moving. You have to remember, our economy is a Ponzi scheme, and the government is here to make sure it doesn't collapse; just like in 2008, look at the Ponzi scheme aka stock markets now, in record territory again, and again with absolutely nothing substantiating that value. Taxes do nothing to harm the economy, they are used to bolster it, and that's what everybody demands. The problem is people ask for an economy that ****s them, so that's what they get; and for that they get a bunch of crap from China that has huge margins on it. Wall Street is the big Tax on America that brings us war and death, and in not a long time, extinction.
 
If the airplane is already used specifically for business purposes then one could deduct ones expenses for it and I imagine depreciate it as well. If the OP is in fact doing this than the write off of the 430 should be fairly simple. If the aircraft is not used specifically for a business purpose than the OP can't.

Of course anyone can do anything so long as they aren't caught.
 
steingar said:
If the airplane is already used specifically for business purposes then one could deduct ones expenses for it and I imagine depreciate it as well. If the OP is in fact doing this than the write off of the 430 should be fairly simple. If the aircraft is not used specifically for a business purpose than the OP can't.



Of course anyone can do anything so long as they aren't caught.
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The airplane is 100% pleasure aircraft. It's not used in any capacity as a business aircraft.

I'm not interested in "getting one over" on the Feds. Not worth the worry or the hassle if/when caught.

I fly a Cheyenne part time.
I own an RV-6.

Cheyenne has a G530/430 combo.
I'd like a 430 in the RV.

Thought I'd see if there was a pain free, legal method to use my commercial pilot status to help write off the G430.

If so, fine.
If not, that's fine too. ;)
 
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