Flight training deductible if I plan to instruct as a business in the future?

[camel]

Hi everyone,

I'm currently a PPL and I plan to eventually get my instrument, commercial and CFI, so I can make a little bit of money in the future. Since my training and hours are working towards this goal, can I deduct any of my expenses from my income, for tax purposes? Thanks

 

[camel]

Thanks for the great answer!

 

[SkyDog58]

That AOPA article has some great information and reading it gave me a possible idea.

Even though I have been working in aviation maintenance for 35 years, I only received my PPL about 6 years ago and since then added my MEL & SES to my SEL. I am currently working on my CPL with the hopes that I can do a little bit of commercial flying on the side such as ferry flights, jump pilot, banner towing, etc. I have no desire to fly for the airlines and am a little long in the tooth anyway to start now.

My question is this. I do not have my IFR but would like to get it. As I can fly certain jobs commercially but have some limitations due to no IFR, I wonder if I can deduct my IFR training once I actually start to fly some commercially. As I would have already achieved the entry point level of training for the new career and began working, the IFR would fall under the area included in this part from the AOPA article.

If you can get by these first two hurdles, you must now consider whether the flight training you received was (1) necessary to meet the requirements of your employer (or of law or regulations) for keeping your salary, status, or employment; or (2) necessary to maintain or improve skills required in performing your current duties. In order for your expenses to be deductible, you must be able to respond "yes" to one of these questions.

It would definitely improve my skills for doing ferry flights.

Thoughts?

 

[SkyDog58]

You might be right. I do not know. But I think it is a much grayer area than the OP's question.

 

[flyingron]

No, training is only required when it is a necessary requirement to maintain your EXISTING career/business or to improve your position there. Training to obtain a different career/business HAS NEVER been deductible.

 

[SkyDog58]

No, training is only required when it is a necessary requirement to maintain your EXISTING career/business or to improve your position there. Training to obtain a different career/business HAS NEVER been deductible.

Yes, we are all in agreement on that one. But my question was if I get my CPL first and start ferrying airplanes VFR, would getting my IFR be considered improving rather than meeting basic requirement. I just think it is an interesting what-if.

 

[asgcpa]

As others have mentioned, training/education costs for a NEW career is NOT deductible. As an example, my accounting courses taken while working in a bank were not deductible as I was not in accounting in the bank. I was hired by a large accounting firm, and needed my CPA so the few courses I took afterward I deemed deductible as I was already working as an accountant. Fast forward a decade later. I was a CPA working in public accounting and my entire Master of Science in Taxation was deemed deductible.

While you should get advice from your tax professional, if I wanted to be an airline pilot, the PPL and CPL plus ratings to the point of the CPL would not be deductible in this case as I would be switching careers. If I was a working Commercial pilot, there would be argument that any training to enhance my skills would be deductible. But again, I disclaim any perceived advice and recommend you speak with your tax professional.

 

[asgcpa]

Yes, we are all in agreement on that one. But my question was if I get my CPL first and start ferrying airplanes VFR, would getting my IFR be considered improving rather than meeting basic requirement. I just think it is an interesting what-if.

If I was a working commercial pilot ferrying airplanes and then got a rating after to enhance my position in my current career of ferrying airplanes, there would be strong argument for deductibility.

 

[JCranford]

Haaa, that's like saying 'I plan to become an engineer. Can I deduct my entire college education". Yeah, I don't think so

 

[SkyDog58]

If I was a working commercial pilot ferrying airplanes and then got a rating after to enhance my position in my current career of ferrying airplanes, there would be strong argument for deductibility.

Thank you. That was my point. I'm glad someone understood what I was trying to say. I do not know if it is correct or not but I think it would be worth a try if I ever get to that point.

 

[flyingron]

Yes, we are all in agreement on that one. But my question was if I get my CPL first and start ferrying airplanes VFR, would getting my IFR be considered improving rather than meeting basic requirement. I just think it is an interesting what-if.

In that case, I believe the answer is yes. The rating would enhance your skills rather than qualifying your or meeting mimimum requirements for the job.

 

[mtuomi]

What's the definition of "working as a commercial pilot"? If I had my CP, and put out a website saying I am willing to ferry planes VFR, am I "working" as a commercial pilot and then to improve that website(and then, improve my credentials), I can deduct my IR rating?

 

[SkyDog58]

What's the definition of "working as a commercial pilot"? If I had my CP, and put out a website saying I am willing to ferry planes VFR, am I "working" as a commercial pilot and then to improve that website(and then, improve my credentials), I can deduct my IR rating?

I think that to be on the safe side that you might need to prove that you have already generated some income from it and are still at least trying to do so before trying to advance or improve your qualifications or credentials. It would also look better if you only offset some of the income from your operation and not show a loss after your deduction. Maybe try to ensure that it is spread over a couple of years as well. This is all guesswork though as I am by no means even close to being an expert on these sort of things.

 

[MooneyDriver78]

You can't deduct something you did in the previous year, or deduct for something you are "planning" to do. Once you are established you can deduct expenses for ongoing training (get CP, start business, get CFI), you can deduct CFI. You don't have to make a profit, but you have to make $, otherwise you're not in business. And there is a clause stating you are attempting to make a profit, and are doing all the normal things a business would do, and just creating a website not going enough. And a ferry pilot with out IFR rating is not trying to make money.

 

[mtuomi]

And there is a clause stating you are attempting to make a profit, and are doing all the normal things a business would do, and just creating a website not going enough. And a ferry pilot with out IFR rating is not trying to make money.

This was exactly my question. How and who can say a ferry pilot without IFR rating is "not" trying to make money?

 

[MooneyDriver78]

This was exactly my question. How and who can say a ferry pilot without IFR rating is "not" trying to make money?

Ultimately the IRS, when you do your taxes, you will report 0 income, which is a big red flag, almost guarantee to have an audit.
BTW, with taxes, the burden is on you to prove your case.

 

[asgcpa]

What's the definition of "working as a commercial pilot"? If I had my CP, and put out a website saying I am willing to ferry planes VFR, am I "working" as a commercial pilot and then to improve that website(and then, improve my credentials), I can deduct my IR rating?

You have to have a profit motive and be actively working in the field. Having another job and not bringing in reasonable income from flying would not likely qualify. But consult your tax advisor. I don't know your situation.