Changing aircraft registration from personal to LLC
- Thread starter maduro
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Bro do you even lift
Yes. Get tax advice before you do that. Decide whether the expected benefit warrants the accounting effort.
From the FAA end, it's just the standard bill of sale and application for registration.
As others mentioned, you do want to find out whether it triggers sales or use tax in your state and whether the cost/benefit equation works for you.
As others mentioned, you do want to find out whether it triggers sales or use tax in your state and whether the cost/benefit equation works for you.
donjohnston
Pattern Altitude
Yep, check the sales tax implications first. I wanted to kill off the S-Corp that my 182RG was in and make it a personal aircraft. The $7,000 tax bill killed that idea.
I'm sorry if this is too far off track for the thread.... but now I'm curious
I'm fuzzy on all of this
but I think that I understand there's really not much or any benefit to a plane being in a corp if it's personally owned and personally used....
but I thought that I understood that there is some legal protection reasoning in the scenario that say... you let a friend borrow the airplane
so I've kindof assumed there's not really a downside to putting an aircraft into a corp...other than the little bit of trouble setting it all up initially.
Now I get in teh context of this thread, there's a potential tax hit if moving 'ownership'...but if you're setting up the corp at the time of purchase,...???
why did you want to move it out of the corp?
I'm fuzzy on all of this
but I think that I understand there's really not much or any benefit to a plane being in a corp if it's personally owned and personally used....
but I thought that I understood that there is some legal protection reasoning in the scenario that say... you let a friend borrow the airplane
so I've kindof assumed there's not really a downside to putting an aircraft into a corp...other than the little bit of trouble setting it all up initially.
Now I get in teh context of this thread, there's a potential tax hit if moving 'ownership'...but if you're setting up the corp at the time of purchase,...???
schmookeeg
En-Route
I just did this yesterday. The aircraft title companies can do this for you same-day. Aerospace reports did mine for $210. They prepared supporting paperwork for the FAA that went with the bill of sale.
Agree on the tax check. CA will not consider this a sale if the ownership situation has not materially changed (ie owner to 100% shares in the LLC) but they are capricious and I am expecting them to bill me anyway even though I discussed this with them beforehand.
Agree on the tax check. CA will not consider this a sale if the ownership situation has not materially changed (ie owner to 100% shares in the LLC) but they are capricious and I am expecting them to bill me anyway even though I discussed this with them beforehand.
donjohnston
Pattern Altitude
I setup a corp because the aircraft was in leaseback. After I stopped renting it out, I wanted to kill the corp so I didn't have to deal with the tax returns and other expense of keeping the corp. In the end I had to keep everything as is to avoid the tax penalty.
maduro
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Maduro
Yeup.... Aerospace Reports has a nice go to place to get this done! Here is the link and its gonna be $210. Thanx
www.aerospacereports.com
Also, they said for California there will be no further tax implications since the actual ownership is not changing.
schmookeeg!!
Ownership Transfer | Aerospace Reports
Also, they said for California there will be no further tax implications since the actual ownership is not changing.
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schmookeeg
En-Route
Yeup.... Aerospace Reports has a nice go to place to get this done! Here is the link and its gonna be $210. Thanx
schmookeeg!!
Ownership Transfer | Aerospace Reports
Also, they said for California there will be no further tax implications since the actual ownership is not changing.
Yep. And if the Tax Goons at CDTFA come after you anyway, we are both relying on the provisions of Regulation 1610 (b)(2)(C) found here https://www.cdtfa.ca.gov/lawguides/vol1/sutr/1610.html
"substantially similar" meaning no real ownership change occurred, such as moving the faa rego from individual to a LLC holding the plane, and you retain the shares.
There are formalities and fees, including annual feed, associated with creating an entity in most states. They may or may not be worth the liability and asset protection benefits. Thats a discussion between you and your professional advisors.
In Californie you're gonna have to pay $800/year for an LLC or corporation.
MIFlyer
Pattern Altitude
I’m just a dumb renter, but plan to buy in an llc in case I take on partners later in case I ever drop my d and finally buy something
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dans2992
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Dans2992
Try AZ. Basically free.
Fine if that's where you live. In Virginia, it's $50 to keep the LLC alive.
Check the states until you find what you want, California is a rip off, some states have a form to fill out annually with a low fee, that form usually is just your name and e-signature, all done online.
An LLC doesn’t necessarily create extra tax forms, it depends what you are doing with it. Are you trying to write off expenses then yes, but if there’s no income or expenses then it’s pretty normal. LLC is pass through taxation to your personal return unless you elect to be taxed as a corporation. Unless you have lots of net profit (then taxed as a corporation is cheaper than individual tax rates) then pass through makes the most sense.
Some states have personal property tax, assets tax, etc, so you need to check closely into those. There’s a few states that don’t bother you for anything but a small annual fee ($25/$50) and those would be more ideal.
An LLC doesn’t necessarily create extra tax forms, it depends what you are doing with it. Are you trying to write off expenses then yes, but if there’s no income or expenses then it’s pretty normal. LLC is pass through taxation to your personal return unless you elect to be taxed as a corporation. Unless you have lots of net profit (then taxed as a corporation is cheaper than individual tax rates) then pass through makes the most sense.
Some states have personal property tax, assets tax, etc, so you need to check closely into those. There’s a few states that don’t bother you for anything but a small annual fee ($25/$50) and those would be more ideal.
Unless you're willing to move, state shopping doesn't do you any good. The franchise tax applies to foreign entities operating within California.
And if you're using an LLC as a pass-through or disregarded entity, it's not clear what good it is doing you.
And if you're using an LLC as a pass-through or disregarded entity, it's not clear what good it is doing you.
FPK1
Line Up and Wait
I don't think it actually cost $800 it's just you must pay in Q1 ab estimated tax of $800 and it's applied to that year's tax return...
But the LLC holding a personal aircraft isn't going to have any other income to apply it to. You pay $800 for having the LLC around.
FPK1
Line Up and Wait
Good point. My plane is in a S Corp and I have S Corp income, therefore for me, it applies toward my taxes...
schmookeeg
En-Route
No, it's a minimum annual tax. https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html
I wanted to use Wyoming, my normal out of state nexus, but it wouldn't work for my purposes. the $800 is definitely a rip, but.. if you need to have nexus here, no point avoiding it, just build it into your fiscal assumptions and continue.
Again, depending on where you are, that may or may not be a good strategy. In states, that dont consider moving it into a entity a taxable event, there is little downside to buying it as a personal aircraft. That way, you avoid annual filing fees and the additional accounting expense of creating the annual tax form for the entity. If you need to move it into an entity down the line, you can still do that. Form the LLC, transfer it into the LLC in a way that doesn't trigger a tax event (usually some kind of affidavit you have to file that the ownership remains the same). After the transaction concludes, sell the shares (or rather 'membership interests').