Tax deductible ?

Kitch

Kitch

Pre-takeoff checklist
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Kitch
Good morning,

Going to be making the move to ownership in the next few months. Just curious how tax deductible I can make an airplane. I have ownership in a couple different business with facilities and customers in multiple states. I'm curious if the company should be the airplane or if I should personally and rent it back.

I understand its best to talk to my CPA and I will I'm just looking for a little feedback while I'm bored.

If you prefer not to discuss on a public forum feel free to DM me.

Thanks
 
You're in a gray zone. Definitely need professional representation any time you involve a plane and business, especially one where the plane is incidental instead of core. People do it, but the IRS got serious a while back about this sort of thing that has the optics of a dodge (even if it isn't).

My plane is set up the way you say, but it's easier for me, as the aircraft is its own business. It's a leaseback and I rent it when I use it. I was careful to set my rate of rental to something that fully covers the incremental cost of flying plus a healthy estimate at the fixed cost. There's no profit, but the number is totally defensible. (Granted, I haven't reset it in a while. It's really an exercise I should do every year...but I'm lazy.) I am able to write off the plane's expenses and some defensible business expenses (AOPA membership, for instance).
 
Consult an Aviation CPA...not a random Joe Blow CPA. It can very nuanced in the application of tax law and business use.
 
Do you deduct/depreciate other vehicles or modes of transportation used in your normal course of business? If so an airplane is no different. Just another tool used to further your profitability.
 
Kitch said:
Good morning,

Going to be making the move to ownership in the next few months. Just curious how tax-deductible I can make an airplane. I have ownership in a couple of different businesses with facilities and customers in multiple states. I'm curious if the company should be the airplane or if I should personally and rent it back.

I understand its best to talk to my CPA and I will I'm just looking for a little feedback while I'm bored.

If you prefer not to discuss on a public forum feel free to DM me.

Thanks
Click to expand...

This was discussed in detail a while back.. the advice was all over the board. As others said, consult a tax attorney or a knowledgable accountant.
 
Thanks for the responses so far !!

azblackbird said:
Do you deduct/depreciate other vehicles or modes of transportation used in your normal course of business? If so an airplane is no different. Just another tool used to further your profitability.
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Yes we are a trucking company so we are well versed in vehicle depreciation.
 
Kitch said:
Yes we are a trucking company so we are well versed in vehicle depreciation.
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Neighbor has a fleet of multi-state grain/cattle/heavy equipment haulers and uses his A36 for calling on new accounts, transporting employees, and running parts. Just another tool in his bin to help further his business. ;)
 
https://www.irs.gov/publications/p463

I'll disagree with people who think there is really much aviation specific. You need a competent tax advisor. There's nothing magic about it being an airplane over any other vehicle.

Of course, the non-tax issue is what you can legally do without a commercial pilot (and perhaps a commercial operator) certificate.
 
flyingron said:
There's nothing magic about it being an airplane over any other vehicle.
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That is not entirely correct as a blanket statement...for example if a business owned and tax deducted plane is used for personal use that can become a taxable fringe benefit on your reported income if not structured properly.
 
what are you trying to do?

I have a plane in an LLC and I rent it from that LLC for my purposes. Anybody can rent it for that matter and I have to comply with all of the FAA requirements like 100 hour inspections though.
 
My main goal is to write off as much of the airplane and expenses as possible without it causing a red flag. 99% of the people that will fly with me are employed by me (family). I want to use it to visit customers go to our facilities in other states transfer parts etc. As well as some trips I'll have to "find" a reason to take.
 
Shawn said:
That is not entirely correct as a blanket statement...for example if a business owned and tax deducted plane is used for personal use that can become a taxable fringe benefit on your reported income if not structured properly.
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And this is different from any other vehicle how?
 
flyingron said:
And this is different from any other vehicle how?
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most people have a primary car that can be claimed for personal use even though they use company car...most do not also have a primary plane to limit that exposure
 
k9medic said:
what are you trying to do?

I have a plane in an LLC and I rent it from that LLC for my purposes. Anybody can rent it for that matter and I have to comply with all of the FAA requirements like 100 hour inspections though.
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Strict rental doesn't require 100-hour inspections. Now if you were offering flight instruction, that would be a different story.
 
Would rather do a 100 hour than deal with an ASI from a FSDO that was curious.

As it is, we run right at 100 hours per year.


Sent from my iPhone using Tapatalk
 
Kitch said:
My main goal is to write off as much of the airplane and expenses as possible without it causing a red flag. 99% of the people that will fly with me are employed by me (family). I want to use it to visit customers go to our facilities in other states transfer parts etc. As well as some trips I'll have to "find" a reason to take.
Click to expand...
Just make sure your business use exceeds your personal use. Friend of mine who is CPA told me a good rule to go by is at least 75/25. Of course you'll pro-rate your personal use against any business related deductions or depreciation.
 
Shawn said:
most people have a primary car that can be claimed for personal use even though they use company car...most do not also have a primary plane to limit that exposure
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Huh? What exposure? How is personal use of a car differing from personal use of a plane?
 
k9medic said:
Would rather do a 100 hour than deal with an ASI from a FSDO that was curious.
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Curious as to what? There's no requirement for 100 hours on rentals. PERIOD. It doesn't matter how curious he is. I've been involved in flight schools/flying clubs for years. If you are a strict rental (i.e., no instruction, no carriage for hire) there's no problem with only doing annuals.
 
azblackbird said:
Just make sure your business use exceeds your personal use. Friend of mine who is CPA told me a good rule to go by is at least 75/25. Of course you'll pro-rate your personal use against any business related deductions or depreciation.
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"I was told" was one of the most dangerous things in tax/legal principals.

There's no 75/25 rule. You either use it 100% for the business purpose, or you follow the rules for apportioned use. 10% personal use not handled properly is no better than 50%. And if anybody told you they know the "magic" of how much you can get away with without triggering an IRS inquiry, they're lying.

The one thing that the original questioner should do is get competent tax advice (preferably from someone who will back up their positions) rather than listening to the much of the drivel posted here.
 
flyingron said:
The one thing that the original questioner should do is get competent tax advice (preferably from someone who will back up their positions) rather than listening to the much of the drivel posted here.
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I already did all the ground work on business use of an airplane and consulted with several professionals who specialize in that realm. Naturally the OP will want to consult with those same/like people as I did to solidify his desires.
 
I appreciate all the feedback !! Yes I am going to talk to my tax guy about it. I was just looking for some general information on how it could/is being done. Thanks again
 
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