TBO and part 91 flight training

brien23

brien23

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Brien
Does TBO on part 91 flying club flight training limit the time on the engine to TBO? I thought TBO was more of a Part 135 limit?
 
I have a plane (LSA) in leaseback to a flight school and they stated that for their part 61, the engine can go past TBO as long as it passed the 100hr inspection. With that being said, they stated when they shift to a Part 141, the engine much be overhauled or replaced at TBO.
 
I had always heard, and believed, that anecdote.

I went searching for any reference in the FAR and couldn't find one. Only thing I think could ever apply is if a 121, 135, or 141 operation had that in their approved ops specs.
 
midwestpa24 said:
I had always heard, and believed, that anecdote.

I went searching for any reference in the FAR and couldn't find one. Only thing I think could ever apply is if a 121, 135, or 141 operation had that in their approved ops specs.
Click to expand...

141 doesn't have OpSpecs.
 
Nub_Pilot said:
I have a plane (LSA) in leaseback to a flight school and they stated that for their part 61, the engine can go past TBO as long as it passed the 100hr inspection. With that being said, they stated when they shift to a Part 141, the engine much be overhauled or replaced at TBO.
Click to expand...

You might want to read 141.39(a)(3) and Part 91 subpart E. No such requirement exists for Part 141.
 
Keep in mind there is nothing that prevents an operator from following OEM's recommendations. But one aspect that does catch those ops like 135 in requiring to follow OEM TBO times is the requirement/option of selecting an OEM maintenance program which calls for the use of factory TBO limits. But as stated in the article above, factory TBO limits are routinely extended via an FAA process regardless the type ops where required.
 
While I agree with the FAA interpretations mentioned, there could be a tax implication.

If you are reserving for overhaul based on TBO (let's say $30k to overhaul at TBO of 2k hours = $15/hr reserve) that $15/hr is an expense that can be currently deducted from revenue, but if you're not making metal and the engine runs to 2.5k hours you should not be deducting the last $7,500 from revenue. Unless of course you reassess the expected overhaul cost to $37.5 and get that new estimation blessed with your CPA.
 
While FAA regs may not require overhaul at TBO, I have heard of insurance companies requiring Part 91 training operations to overhaul at TBO to maintain full coverage.

Just a thought to double check your insurance policy.
 
jrollf said:
While FAA regs may not require overhaul at TBO, I have heard of insurance companies requiring Part 91 training operations to overhaul at TBO to maintain full coverage.

Just a thought to double check your insurance policy.
Click to expand...

I too have heard this rumor. Haven't seen anyone prove it with an insurance policy though
 
jrollf said:
While FAA regs may not require overhaul at TBO, I have heard of insurance companies requiring Part 91 training operations to overhaul at TBO to maintain full coverage.

Just a thought to double check your insurance policy.
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That would skoosh quite a few flight schools instantly. No way this is sane with FBO economics.
 
jrollf said:
While FAA regs may not require overhaul at TBO, I have heard of insurance companies requiring Part 91 training operations to overhaul at TBO to maintain full coverage.

Just a thought to double check your insurance policy.
Click to expand...

Not true.
 
Ravioli said:
While I agree with the FAA interpretations mentioned, there could be a tax implication.

If you are reserving for overhaul based on TBO (let's say $30k to overhaul at TBO of 2k hours = $15/hr reserve) that $15/hr is an expense that can be currently deducted from revenue, but if you're not making metal and the engine runs to 2.5k hours you should not be deducting the last $7,500 from revenue. Unless of course you reassess the expected overhaul cost to $37.5 and get that new estimation blessed with your CPA.
Click to expand...
Umm... I don't think you can deduct such reserves. What you can do is consider a TBO to have a definite useful life and use that to determine a depreciation deduction which may offset some of that.
 
flyingron said:
Umm... I don't think you can deduct such reserves. What you can do is consider a TBO to have a definite useful life and use that to determine a depreciation deduction which may offset some of that.
Click to expand...

I know that our club, a corporation, collected $60/hr dry for use of the plane, and put 16 of those into the engine reserve, and reported $44/hr as revenue. I know it because I was the treasurer, and I know our CPA blessed it because he prepared and filed using said convention for each of the five years I was the treasurer.
 
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