Tax implications of airplane ownership

GSDpilot

GSDpilot

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GSDpilot
Does anybody have any feedback or advice on ownership of a single engine aircraft through your business or just owning it personally? I understand you can depreciate, write off business related travel, etc. Just curious if any business owners out there can share good and bad of owning through your company or if owning personally made more sense.
 
Business travel is deductible whether it is by car or airplane. The mileage charge is in some federal website I'm too lazy to look up.
 
I sold my airplane to my LLC. My accountant said that I can fully deduct it, so, I did. But yes, talk with a tax accountant
 
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Talk to a CPA and a tax attorney.

One thing that many people miss is that once you fully depreciate it when you do sell it, the sale price becomes a gain.
 
A pal is under an audit presently. The IRS has made it clear that he can write off plane trip costs for himself and his employees, but no friends or family.
So, the math... if 4 people are in the plane, say his CFO and himself -- and their two wives who are not employees... only 2/4 ths of the trip is a write off.
Lesson here, make sure your CPA "gets it" re digging in to aviation rules and formulas.
 
My impression on this has always been that unless it’s really really really a business tool or you’re willing to push the limits and accept more audit risk than I am, the juice is not worth the squeeze in terms of the benefit to headache trade-off.
 
AGLyme said:
A pal is under an audit presently. The IRS has made it clear that he can write off plane trip costs for himself and his employees, but no friends or family.
So, the math... if 4 people are in the plane, say his CFO and himself -- and their two wives who are not employees... only 2/4 ths of the trip is a write off.
Lesson here, make sure your CPA "gets it" re digging in to aviation rules and formulas.
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They gotta want ya bad to be digging into how many ppl where on board!
 
If you’re in the aviation industry and can make $$ with the plane you probably can get some advantages out of it.

If you’re NOT in the industry and can’t fly for profit, you might be asking for trouble.

CPA question, not POA ;)
 
For us little guys, i.e., the plane is not actually purchased by and for our business, corporation, or LLC, or whatever, it's probably akin to the home office deduction. Audit fodder, and if you DON'T get audited and/or it's accepted, you have nothing left, after depreciation, to deduct against the sale price when you sell if you take anything other than the aviation equivalent of standard mileage expenses for autos. Not sure that's even a thing.. never bothered to find out. I'm just a VFR guy for now, so flying for business would mean that, living in the NE, 80% of the time, I'd probably miss my gig.
 
In Texas, I know someone who sold the plane to his business, taking it out of the sales tax exemption category, and yup the state found it, made him pay up.
 
cgrab said:
Business travel is deductible whether it is by car or airplane. The mileage charge is in some federal website I'm too lazy to look up.
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donjohnston said:
Talk to a CPA and a tax attorney.

One thing that many people miss is that once you fully depreciate it when you do sell it, the sale price becomes a gain.
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you can sell a plane for more than you paid for it?

I worry about a lot of stuff, but, I am not worried about gains selling my plane.
 
Morgan3820 said:
you can sell a plane for more than you paid for it?

I worry about a lot of stuff, but, I am not worried about gains selling my plane.
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Of course you can sell a plane for more than you paid for it. :rolleyes:

However, that's irrelevant. Once you depreciate it, the value of the plane is $0. So if you sell it for a $1,000, that would be a $1,000 gain.
 
AGLyme said:
A pal is under an audit presently. The IRS has made it clear that he can write off plane trip costs for himself and his employees, but no friends or family.
So, the math... if 4 people are in the plane, say his CFO and himself -- and their two wives who are not employees... only 2/4 ths of the trip is a write off.
Lesson here, make sure your CPA "gets it" re digging in to aviation rules and formulas.
Click to expand...

Not a very creative CPA. It's easy and legal enough to tie the wives to the company.
 
My accountant and attorney advised me to keep my planes private and never spend a company dime on them. That keeps liability personal and not corporate. I asked, they answered. That's not advice, just a pirep.
 
Stewartb said:
My accountant and attorney advised me to keep my planes private and never spend a company dime on them. That keeps liability personal and not corporate. I asked, they answered. That's not advice, just a pirep.
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Funny, on the advice of experts I moved ownership of the aircraft to the LLC to make the corporation liable and hopefully remove personal liability.
 
Morgan3820 said:
Funny, on the advice of experts I moved ownership of the aircraft to the LLC to make the corporation liable and hopefully remove personal liability.
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Your personal liability is NOT removed if you are the one flying the plane. You are still responsible for your actions. Now if someone else was flying the plane, you should be protected.
 
Morgan3820 said:
Funny, on the advice of experts I moved ownership of the aircraft to the LLC to make the corporation liable and hopefully remove personal liability.
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Isn't that why we have insurance?
 
EdFred said:
Your personal liability is NOT removed if you are the one flying the plane. You are still responsible for your actions. Now if someone else was flying the plane, you should be protected.
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I rent out the plane to select individual s so that is my goal.
 
Morgan3820 said:
I rent out the plane to select individual s so that is my goal.
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In that case its absolutely the right decision. Lot of people think an LLC provides them protection from their own actions
 
EdFred said:
In that case its absolutely the right decision. Lot of people think an LLC provides them protection from their own actions
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Nope. I am always responsible. Just ask my boss, wife, daughter..
Fortunately I have thick skin and broad shoulders.
 
EdFred said:
A schoolbus full of dead children will blow through your insurance coverage before you can sneeze.
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So I guess you have your cars through a corporation or LLC? Same accident could happen with that as well...…..
 
StanN45 said:
So I guess you have your cars through a corporation or LLC? Same accident could happen with that as well...…..
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Nope, because *I* would still be driving it. Corporation provides no protection from my actions. But even a $5MM umbrella policy would be wiped out in a hurry. I supposed I could have a $300MM umbrella policy to be safe...
 
Stewartb said:
My accountant and attorney advised me to keep my planes private and never spend a company dime on them. That keeps liability personal and not corporate. I asked, they answered. That's not advice, just a pirep.
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Why not create a new corporation for the plane?? Of course liability still falls to you if there is an accident you caused, but let the new corporation deal with expenses etc. for the plane.
 
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1RTK1 said:
Why not create a new corporation for the plane?? Of course liability still falls to you if there is an accident, but let the new corporation deal with expenses etc. for the plane.
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I read somewhere that 75% of Cirrus aircraft are owned and paid for by small corporations. How else would a regular person have such an expensive item?
 
1RTK1 said:
Why not create a new corporation for the plane?? Of course liability still falls to you if there is an accident you caused, but let the new corporation deal with expenses etc. for the plane.
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Because my airplanes don't produce revenue. There are no earnings. Just spending.
 
1RTK1 said:
Why not create a new corporation for the plane?? Of course liability still falls to you if there is an accident you caused, but let the new corporation deal with expenses etc. for the plane.
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This is actually what my CPA advised. Create an LLC for the airplane. It would be reported on my personal tax return (so I don't have the expense of filing seperately). This protects both personal and company assets from an incident with the plane. Create a seperate bank account for the LLC/plane, and charge the business for related travel expenses. I should have clarified that I spoke to a CPA when posting, but wanted to get independent opinions.
 
GSDpilot said:
This is actually what my CPA advised. Create an LLC for the airplane. It would be reported on my personal tax return (so I don't have the expense of filing seperately). This protects both personal and company assets from an incident with the plane. Create a seperate bank account for the LLC/plane, and charge the business for related travel expenses. I should have clarified that I spoke to a CPA when posting, but wanted to get independent opinions.
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This is probably obvious, but a CPA isn’t the right resource for matters of liability. I’m guessing an attorney’s conclusion to asset protection would be “maybe”
 
Sam D said:
This is probably obvious, but a CPA isn’t the right resource for matters of liability. I’m guessing an attorney’s conclusion to asset protection would be “maybe”
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You are correct, and my CPA also referred me to an aviation attorney. Waiting to hear back from him...
 
The corp will "only" protect you from others that fly your plane, it won't protect You from Your accident.
 
A friend of mine owns his plane under an LLC and "rents" it to himself. I have no idea how that works but he claims it is a huge tax deduction.
 
Timbeck2 said:
A friend of mine owns his plane under an LLC and "rents" it to himself. I have no idea how that works but he claims it is a huge tax deduction.
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I did that as well. Except when I started, it was with a club. Then the club folded and I was renting it out directly. But during that time, I paid the same rent as everyone else.
 
1RTK1 said:
No one said a Corp has to make money.
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A constantly loss-making entity set up purely to own a personal airplane would likely fall afoul of the IRS's "hobby loss" rule and "losses" would cease to be deductible.
 
I used my personal airplane for company business many times in the mid-1990s; as mentioned, its use is not considered differently from a car. I always travelled alone for business, so no wonky dodges needed for tax purposes. It actually made sense to do this at the time; four of my clients were minutes from airports. I didn't want the company to own the plane; any tax advantages vaporized in the "audit me, please" halo of airplane ownership.
 
tiger said:
A constantly loss-making entity set up purely to own a personal airplane would likely fall afoul of the IRS's "hobby loss" rule and "losses" would cease to be deductible.
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Possibly, but talk to a qualified accountant first..
 
Timbeck2 said:
A friend of mine owns his plane under an LLC and "rents" it to himself. I have no idea how that works but he claims it is a huge tax deduction.
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I considered doing that, but I don't trust myself as far as I can throw me; I'd probably end up taking myself to court.
 
How does the IRS prove who was in the plane??
 
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