Flying for compensation vs. gift.

[Capt. Geoffrey Thorpe]

Ok, to get this out of another thread...

(c) A private pilot may not pay less than the pro rata share of the operating expenses of a flight with passengers, provided the expenses involve only fuel, oil, airport expenditures, or rental fees.


Yes, I still have doubt. I am wondering if there is any way that the FAA would consider using money deposited into a flying account to be a violation of (c) above, or the fact that the FAA considers flight time to be compensation if the pilot doesn't pay for it (can't find it in part 61... yet...). But I no longer care because it seems that my simple question, intended to increase my knowledge, has been blown out of proportion. Never mind.

<edited to add the section about flight time being compensation>

Too late to never mind... :wink2:

First, if you are looking for the black and white, written down, this makes sense, regulation, you ain't gonna find it.
ButI think it's a legit question, so - my unegumaked guess at it:

The FAA gets nit picky if they think that someone is trying to operate as a commercial pilot without the commercial ticket. (protecting the public and all that.)

And, for years and years, people have tried to find ways around the rules.

For example: "I will let you fly my airplane for free all day long and build the hours you need - all you have to do is fly it with this banner attached. I'm not going to pay you so you don't need a commercial ticket."

As a result, the FAA gets weirder and weirder in their interpretations. For example: "logging time is compensation".

In the end, it gets down to intent and what/why did someone get the money. Or, more specifically, what the FAA thinks your intent is.

If some non- pilot had said, "Yo! Kimberley! I just rented the airplane so you can fly me up to my cottage." Then that's a violation. The intent is to have Ms. Kimberly "fly for hire."

On the other hand, if someone says "Happy Birthday Kimberley Ann" and she goes flying, then she is paying her pro-rata share. She is paying it out of the money that was given to her.

In the case at hand, someone gave her a gift. The gift was given so she COULD go flying, but not because she specifically did some flying for the gift giver.

Intent. (Or, again, what the FAA thinks is the intent.)

Now -

If I take a pilot for a ride in my airplane and let them be sole manipulator (which means they can log the time), do I have to make them pay? Or would making them pay constitute renting out my airplane which I can't do because it is experimental?

 

[kimberlyanne546]

Ok, to get this out of another thread...



Too late to never mind... :wink2:

First, if you are looking for the black and white, written down, this makes sense, regulation, you ain't gonna find it.
ButI think it's a legit question, so - my unegumaked guess at it:

The FAA gets nit picky if they think that someone is trying to operate as a commercial pilot without the commercial ticket. (protecting the public and all that.)

And, for years and years, people have tried to find ways around the rules.

For example: "I will let you fly my airplane for free all day long and build the hours you need - all you have to do is fly it with this banner attached. I'm not going to pay you so you don't need a commercial ticket."

As a result, the FAA gets weirder and weirder in their interpretations. For example: "logging time is compensation".

In the end, it gets down to intent and what/why did someone get the money. Or, more specifically, what the FAA thinks your intent is.

If some non- pilot had said, "Yo! Kimberley! I just rented the airplane so you can fly me up to my cottage." Then that's a violation. The intent is to have Ms. Kimberly "fly for hire."

On the other hand, if someone says "Happy Birthday Kimberley Ann" and she goes flying, then she is paying her pro-rata share. She is paying it out of the money that was given to her.

In the case at hand, someone gave her a gift. The gift was given so she COULD go flying, but not because she specifically did some flying for the gift giver.

Intent. (Or, again, what the FAA thinks is the intent.)

Now -

If I take a pilot for a ride in my airplane and let them be sole manipulator (which means they can log the time), do I have to make them pay? Or would making them pay constitute renting out my airplane which I can't do because it is experimental?

I like to log (as zero) my flights but I don't actually log the time. It is a personal choice. Sure, I manipulated the controls AT STRAIGHT AND LEVEL - but that is just holding on to the yoke. I didn't use flaps, power, or any other items. I log it so I remember the tail number and where we flew, but NEVER in the column where I add up numbers. That's just me, I want my hours to be "real" as in take off, land, navigate, etc.

 

[poadeleted20]

If I take a pilot for a ride in my airplane and let them be sole manipulator (which means they can log the time), do I have to make them pay?

If you're seriously looking for an answer, then there is a second question that has to be answered before yours can be -- are you getting anything of value in return (other than the joy of giving that person the gift of some flying time, which has no value as long as you don't have a business relationship with that person)? E.g., is this person flying you somewhere you want to go and dropping you there? If the answer is "no," you are getting nothing in return, then there is no quid pro quo, and it's perfectly legal.

Or would making them pay constitute renting out my airplane which I can't do because it is experimental?

It might, if it's a straight "dollars for flying time" deal. Of course, you can certainly share expenses with them if you have "common purpose" for the flight, even in an Experimental.

 

[hopmedic]

Ok, to get this out of another thread...



Too late to never mind... :wink2:

First, if you are looking for the black and white, written down, this makes sense, regulation, you ain't gonna find it.
ButI think it's a legit question, so - my unegumaked guess at it:

The FAA gets nit picky if they think that someone is trying to operate as a commercial pilot without the commercial ticket. (protecting the public and all that.)

And, for years and years, people have tried to find ways around the rules.

For example: "I will let you fly my airplane for free all day long and build the hours you need - all you have to do is fly it with this banner attached. I'm not going to pay you so you don't need a commercial ticket."

As a result, the FAA gets weirder and weirder in their interpretations. For example: "logging time is compensation".

In the end, it gets down to intent and what/why did someone get the money. Or, more specifically, what the FAA thinks your intent is.

If some non- pilot had said, "Yo! Kimberley! I just rented the airplane so you can fly me up to my cottage." Then that's a violation. The intent is to have Ms. Kimberly "fly for hire."

On the other hand, if someone says "Happy Birthday Kimberley Ann" and she goes flying, then she is paying her pro-rata share. She is paying it out of the money that was given to her.

In the case at hand, someone gave her a gift. The gift was given so she COULD go flying, but not because she specifically did some flying for the gift giver.

Intent. (Or, again, what the FAA thinks is the intent.)

Thank you. So what you're saying is that in the regs it's as clear as mud, but if you look at intent, it gets a bit clearer than mud. Do I get that right?

Now -

If I take a pilot for a ride in my airplane and let them be sole manipulator (which means they can log the time), do I have to make them pay? Or would making them pay constitute renting out my airplane which I can't do because it is experimental?

On this one I would have to ask, "Does it count as rent if someone is sharing fuel/oil/(whatever other consumable) expense?"

 

[poadeleted20]

On this one I would have to ask, "Does it count as rent if someone is sharing fuel/oil/(whatever other consumable) expense?"

As I said, that's another story, and depends on meeting the "common purpose" test rather than the quid pro quo test.

 

[Sac Arrow]

Okay here's where it get's really freakin' bizarre.

1. You rent or fly your own airplane on a business trip to attend a meeting. You can get reimbursed 100% of the costs as a travel expense.

2. You carry a co-worker with you to the meeting. You can now only get reimbursed for half of the costs.

3. You carry three or more co-workers to the meeting. Now you're even further screwed.

WTF.

 

[hopmedic]

As I said, that's another story, and depends on meeting the "common purpose" test rather than the quid pro quo test.

Got it. I saw your answer after I posted my reply... But I would not have known to ask that question. Thanks.

 

[hopmedic]

Okay here's where it get's really freakin' bizarre.

1. You rent or fly your own airplane on a business trip to attend a meeting. You can get reimbursed 100% of the costs as a travel expense.

2. You carry a co-worker with you to the meeting. You can now only get reimbursed for half of the costs.

3. You carry three or more co-workers to the meeting. Now you're even further screwed.

WTF.

I thought you couldn't carry anyone or anything with you and get reimbursed at all. :/

 

[poadeleted20]

Okay here's where it get's really freakin' bizarre.

1. You rent or fly your own airplane on a business trip to attend a meeting. You can get reimbursed 100% of the costs as a travel expense.

Yup.

2. You carry a co-worker with you to the meeting. You can now only get reimbursed for half of the costs.

...and then only indirectly, by collecting half the direct cost from your co-worker, who then claims for reimbursement from the company.

3. You carry three or more co-workers to the meeting. Now you're even further screwed.

Actually, the reverse is true, as you can now recover 2/3 rather than just half. You collect 1/3 each from the other two, and then they recover what they paid you from the company. The more you carry, the less you pay -- which is kind of the opposite of what the Chief Counsel seemed to want to accomplish with the Mangiamele interpretation (avoiding compensation for carrying co-workers).

WTF.

AOPA's regulations department asked the same question (a bit more politely) about that Mangiamele interpretation, and the answer is still being debated inside FAA HQ.

 

[poadeleted20]

I thought you couldn't carry anyone or anything with you and get reimbursed at all. :/

Right -- you can't get reimbursed by your employer for your share of the direct costs. However, since you have "common purpose" for the trip with your co-worker passengers, you can share expenses on a pro rata basis, collecting from them directly, and the FAA can't control whether they get reimbursed by their employer for their travel expenses (even if their employer and your employer are one and the same). Pretty wacko system, don't you think?

 

[cleared4theoption]

I am by no means an expert on the FAA regs...I am trying to learn as much as I can...but I have to say I have always found this little corner of the FAR scary and confusing

 

[COFlyBoy]

Okay here's where it get's really freakin' bizarre.

1. You rent or fly your own airplane on a business trip to attend a meeting. You can get reimbursed 100% of the costs as a travel expense.

2. You carry a co-worker with you to the meeting. You can now only get reimbursed for half of the costs.

3. You carry three or more co-workers to the meeting. Now you're even further screwed.

WTF.

What if your co-workers are also pilots. Can one claim that they are required crew members?

My company does reimburse for personal aircraft usage, and I have several co-workers who fly. Ahh, the benefits of working in the aerospace industry.

 

[cleared4theoption]

What if your co-workers are also pilots. Can one claim that they are required crew members?

Only, I assume, if the aircraft actually requires two crewmembers..
Of course I could be wrong...and probably am.

 

[hopmedic]

Right -- you can't get reimbursed by your employer for your share of the direct costs. However, since you have "common purpose" for the trip with your co-worker passengers, you can share expenses on a pro rata basis, collecting from them directly, and the FAA can't control whether they get reimbursed by their employer for their travel expenses (even if their employer and your employer are one and the same). Pretty wacko system, don't you think?

No freakin' wonder I have so many questions that can't be answered directly!

So what you're saying here is that if you go alone, you can get reimbursed fully by your employer, should you not take anyone, or carry anything for them (that I've read). It's like they're reimbursing you for car rental or something, right? But if you take a coworker, who is going to the same place as you, for the same employer, he can get reimbursed for his half of the "car rental" but you can't??? And then he can give you his half of the "car rental" expense?

There are simply too many beaurocrats...

 

[ja_user]

I will submit one more..
4. You own the company and are flying your workers. Seemingly if you get reimbursed, it could be via a tax deduction or otherwise?

 

[hopmedic]

I will submit one more..
4. You own the company and are flying your workers. Seemingly if you get reimbursed, it could be via a tax deduction or otherwise?

You own the company, so I assume you own the plane (does that make a difference?)... You are flying for people who work for you... Since you own the company, should I assume you are not "on the clock" (how many owners clock themselves, right?)? So you're not being paid to fly...

I'm thinking you're not going to ask them to pay their pro-rata share (though, I'm thinking you could, but you'd be a pretty lousy boss, in my book)...

My thought is that the business is going to deduct the expense as a business expense. But then I think, wait - if the business is paying for the plane, he's getting flight time compensation.

Sounds to me like he has to pay for it out of his pocket, personally. Can he then deduct it as a business expense?

 

[Skylane81E]

What if your co-workers are also pilots. Can one claim that they are required crew members?

My company does reimburse for personal aircraft usage, and I have several co-workers who fly. Ahh, the benefits of working in the aerospace industry.

Might work if the plane requires a crew >1

 

[ja_user]

You own the company, so I assume you own the plane (does that make a difference?)... You are flying for people who work for you... Since you own the company, should I assume you are not "on the clock" (how many owners clock themselves, right?)? So you're not being paid to fly...

I'm thinking you're not going to ask them to pay their pro-rata share (though, I'm thinking you could, but you'd be a pretty lousy boss, in my book)...

My thought is that the business is going to deduct the expense as a business expense. But then I think, wait - if the business is paying for the plane, he's getting flight time compensation.

Sounds to me like he has to pay for it out of his pocket, personally. Can he then deduct it as a business expense?

Assume that the plane is a rental....

No matter what, either the business (which he fully owns) is getting a deduction (and he is getting free flying time), or he is getting a deduction (maybe an Sole proprietership) and he gets a tax deduction...

 

[TMetzinger]

Okay here's where it get's really freakin' bizarre.

1. You rent or fly your own airplane on a business trip to attend a meeting. You can get reimbursed 100% of the costs as a travel expense.

2. You carry a co-worker with you to the meeting. You can now only get reimbursed for half of the costs.

3. You carry three or more co-workers to the meeting. Now you're even further screwed.

WTF.

That's a function of a whacky CC opinion, not the way the reg is written.

 

[hopmedic]

Assume that the plane is a rental....

No matter what, either the business (which he fully owns) is getting a deduction (and he is getting free flying time), or he is getting a deduction (maybe an Sole proprietership) and he gets a tax deduction...

Hmmm.... Well, without the benefit of experience with the FAA, I would think that the safer way to go would be to pay for the plane personally, and take the tax deduction, instead of the business. That way he's not getting free flight time, and the tax deduction is far less of a benefit than free flight time.

In fact, the more my little brain throws this around, the more I'm thinking that a tax deduction shouldn't even be considered a stumbling block. I think he should be able to take it. He PAID for the flight time. Whether the IRS allows him to receive a tax deduction shouldn't matter to the FAA, should it?

 

[ja_user]

In fact, the more my little brain throws this around, the more I'm thinking that a tax deduction shouldn't even be considered a stumbling block. I think he should be able to take it. He PAID for the flight time. Whether the IRS allows him to receive a tax deduction shouldn't matter to the FAA, should it?

It seems to matter for all those Charity flights..........

 

[hopmedic]

It seems to matter for all those Charity flights..........

Charity flights... Hmmm.... Don't know the rules on that. Gonna have to look. But the FAA doesn't allow a tax deduction if you fly someone for charity?

 

[Capt. Geoffrey Thorpe]

Might work if the plane requires a crew >1

If the flight is in VMC and the other pilot is wearing a view limiting device...

 

[Sac Arrow]

I will submit one more..
4. You own the company and are flying your workers. Seemingly if you get reimbursed, it could be via a tax deduction or otherwise?

Good question. If you are a corporate owner, not necessarily. Certainly not directly. It could affect the cash that is available for distribution to shareholders, you being one of them.

A partnership or proprietorship would be a different situation.

 

[poadeleted20]

No freakin' wonder I have so many questions that can't be answered directly!

Don't blame me, dude.

So what you're saying here is that if you go alone, you can get reimbursed fully by your employer,

Correct.

It's like they're reimbursing you for car rental or something, right?

Basically, yes.

But if you take a coworker, who is going to the same place as you, for the same employer, he can get reimbursed for his half of the "car rental" but you can't??? And then he can give you his half of the "car rental" expense?

You got it.

There are simply too many beaurocrats...

The problem is the lawyers in AGC-200, not the bureacrats.

 

[poadeleted20]

I will submit one more..
4. You own the company and are flying your workers. Seemingly if you get reimbursed, it could be via a tax deduction or otherwise?

You cannot be reimbursed for your own share no matter what (unless, of course, you're a CP/ATP acting as the company pilot). I know of no reason you can't claim this unreimbursed business expense on your personal income taxes.

 

[poadeleted20]

Charity flights... Hmmm.... Don't know the rules on that. Gonna have to look.

See 14 CFR 91.146 in your FAR/AIM book.

But the FAA doesn't allow a tax deduction if you fly someone for charity?

Yes -- the FAA Chief Counsel said the charitable donation of your flight expenses is not a violation of 61.113. For example, Angel Flight and Pilots'n'Paws flights are deductible that way.

 

[catmandu]

Dear 'Tiny Jesus . . .

Aww, crud! I already used that prayer this week! :wink2:

 

[poadeleted20]

Dear tiny baby Jesus . . .

Aww, crud! I already used that prayer this week! :wink2:

Sorry, mate -- I don't write 'em, I just teach folks how to not break 'em.

 

[Palmpilot]

AOPA's regulations department asked the same question (a bit more politely) about that Mangiamele interpretation, and the answer is still being debated inside FAA HQ.

I call the Mangiamele interpretation the "Mangled" interpretation!

 

[denverpilot]

Only, I assume, if the aircraft actually requires two crewmembers..
Of course I could be wrong...and probably am.

How about if one's under the hood the whole way there and the other is acting as Safety Pilot?

Another god-foresaken monkey wrench... most co-owned aircraft aren't truly owned by the co-owners. The aircraft is often owned by an LLC. The co-owners own shares of the LLC, not the aircraft per se.

The LLC allows the co-owners use of the aircraft in writing and the LLC carries the insurance and the accounts.

We really need Tort reform. Folks shouldn't have to resort to such silliness to keep themselves safe(r) from liability lawsuits.

If one of my co-owners decided to go drop baby grand pianos on people's houses from the Skylane, it shouldn't even be possible for me to be named as a co-defendant for his actions. But, if you utilize the most obvious business entity for an airplane purchase, a Partnership... you ARE on the hook for your Partner's actions.

Thus, you'll note that I never, ever, ever refer to my co-owners of the LLC as Partners. It's one of the many many many ways to strip the Corporate "veil" off of the LLC completely.

It's also fun to joke that one is a "Corporate Pilot" which is exactly what the by-laws state in their authorization for me to fly the Corporate aircraft.

Why bring this up?

I believe that Supreme Poobah interpretation is a leading cause of the decline in aircraft ownership and self-travel with aircraft once you get beyond the cost issues.

However, there's another twisty maze trap laid here by LLC co-ownership. To fly the aircraft for the purposes of personal business travel, technically the aircraft must be authorized to be flown for the other Corporation, by me. If the wording of the Aircraft Corporation's by-laws say "for personal use" there's a trap laid in, often by accident.

In my opinion, anyway. I'm not a lawyer, but I'd consult one before flying the Corporate aircraft for personal travel for a separate Corporation. I'm sure some Insurance company lawyer could have a field day with such undefined operations after a loss, too.

Fixing the business flying interpretation won't change everything for the better for co-owned or "club" aircraft. It only helps sole-owners. IMHO.

 

[infotango]

Y'all really need to chill the heck out about this regulation.
Look through the NTSB case law, see how many cases there are against Private Pilots for violating this reg.

Yup....

Go out and fly. Quit worrying about this crap so much.

 

[raider]

You take someone flying who's interested in aviation, you each pay your share, and then he/she treats you to dinner. The FAA, already monitoring your ride with pax, gets suspicious based on your post flight plans. The organization's agent follows you two to the restaurant and, with proper credentials brandished, gets a copy of the bill and payment method. A simple national database check of the 16 digit credit card number turns out to belong to your non-pilot passenger. With the newfound knowledge of your total costs being less not more of your share, you're hit with a violation in the mail within 2 days.

 

[TMetzinger]

You take someone flying who's interested in aviation, you each pay your share, and then he/she treats you to dinner. The FAA, already monitoring your ride with pax, gets suspicious based on your post flight plans. The organization's agent follows you two to the restaurant and, with proper credentials brandished, gets a copy of the bill and payment method. A simple national database check of the 16 digit credit card number turns out to belong to your non-pilot passenger. With the newfound knowledge of your total costs being less not more of your share, you're hit with a violation in the mail within 2 days.

Not really.

 

[JGoodish]

I would be happy to accept any monetary gifts deposited into my account for the purposes of my flying activity. I will happily deal with the "consequences" from the FAA. Note that I did not commit to provide you with anything involving my flying in return for your gift(s).

All of the debate on this issue is silly. The regulations in this case are written with a CLEAR intent, and it was not to prevent someone from gifting money for the purpose of flying. I am aware of no enforcement action against anyone as a result of the above scenario. If there was, then any situation in which someone else, such as a parent, who pays for a pilot to fly would run afoul of the regulations, whether the funding is deposited into a personal bank account or a flight school account. Evaluating laws and regulations absent the context of intent is a pointless exercise.

The definitive answers for questions on any FAA regulation can be obtained by writing to the FAA Chief Counsel's office.


JKG

 

[Sac Arrow]

Y'all really need to chill the heck out about this regulation.
Look through the NTSB case law, see how many cases there are against Private Pilots for violating this reg.

Yup....

Go out and fly. Quit worrying about this crap so much.

Good point. I suspect you have to do something pretty flagrant to get called on that.

Not really.

He was joking.

 

[TMetzinger]

But be really sure you want the question answered.

 

[RotorAndWing]

The definitive answers for questions on any FAA regulation can be obtained by writing to the FAA Chief Counsel's office.


JKG

Don't be surprised if you don't get an answer. The Chief Counsel gets inundated with request for regulation "clarification" and unless this is seen as a problematic regulation they will not take the time to answer.

 

[JGoodish]

But be really sure you want the question answered.

If a regulation is unclear and your actions might cause a violation, or you think the FSDO's answer is wrong, it's worth the effort.


JKG

 

[RotorAndWing]

All of the debate on this issue is silly.

Evaluating laws and regulations absent the context of intent is a pointless exercise.

JKG

Agreed.