Disadvantages / Advantages in buying an LLC to own a plane, in CA?

[bluesideup]

Hi everyone.
Is it better to buy an LLC that has a plane as a single asset fully depreciated, assuming you do not intend to depreciate..?

Just buy the plane and create your own LLC?

Just buy and keep the plane in your name. No LLC..?
Advantages disadvantages.

Protection, Tax, ability to continue to keep maintain a hangar in an airport with hangar waiting list...?
Thank you.

 

[MountainDude]

I recommend you read LLC for dummies. It's a very nice summary of pluses and minuses.

 

[Jeff Oslick]

1) Talk to a CPA and an attorney
2) The principal advantage of buying the LLC with the airplane as the sole asset is that you would not pay use tax on the purchase.
3) If you're going to be the sole owner, you don't need an LLC, and if it is depreciated already, there is no tax advantage.
4) If you keep it in the LLC, you'll have to pay $800/yr to maintain the LLC, plus the cost of accounting/tax filings for the LLC every year.
5) As far as keeping the hangar, that is a discussion to have with the airport. Hangar waiting lists are typically based on a person, not a company. Depending on the airport, they may just let you sign a new lease under your name, but maybe not. Depends on the transferability language in the lease.

 

[cowman]

If you're a sole owner I'm pretty sure the only thing an LLC is going to do for you is obscure your name. If you get sued for a liability issue as a single owner someone can still go after your personal assets. Insurance is what you want to protect yourself from that.

 

[midlifeflyer]

Generally speaking, the only protection an LLC will provide to a sole owner who never rents or lends out the airplane is potentially to the airplane as an asset, and that varies quite a bit from state to state. If you cause an accident, you are responsible, and your assets are subject to being attached to meet your obligations. And if the state imposes owner liability for accidents, both you and the LLC are responsible. There is some theoretical protection to you personally for contractual debts but that's extremely limited, practically speaking, in the sole owner/aircraft situation.

Buying an existing LLC means you are also buying whatever debts that LLC might have, whether you know about them in advance or not. There's a reason that many major business buy-outs are styled as an "asset purchase" rather than a "stock purchase."

Whether you would get some tax or other financial benefit is a discussion to have with your accountant. Whether there is some asset protection benefit to segregating the ownership of the aircraft from your other assets is a discussion with your estate/financial planning professional.

 

[Sac Arrow]

It's just too much hassle for 95% of us. If you are flying something with handles labeled "thrust levers" and there are two or more, it might be a different situation.