Flying the Family for business/vacation - tax impact

[Morne]

Confusing question about flying, ownership and taxes...

Sometime soon I will be flying the family down to Florida in my 182 (Wx permitting). My wife has a week long seminar to attend not far from where my folks have their winter home. So we'll drop off child units with grandma/grandpa and then I'll hang on the beach while she is at lectures.

Normally my wife gets reimbursed for travel expenses associated with this kind of trip. We've done this before I got my PPL when we flew commercially and just paid for my and child tickets out of pocket. No big deal.

What's different this time around is that I will be flying us. Further, the LLC that owns the plane is only in my name, not both of ours. So I am wondering if she can request reimbursement for me flying us down there?

Even if she gets reimbursed, will the IRS view this as taxable income?

 

[W. Stewart]

I will answer with what I do, but by no means am I an accountant or a tax attorney. I am a doctor, have never been audited, and I just do what I think is right, and figure that hopefully the IRS would agree with me if I am ever audited (the same as I do if we take a meal on the business). I own the plane as an individual, for pleasure, I am self-employed, there is no corporation involved, and I am the professional attending meetings in our situation, so it is a bit different than yours.

When I do have occasion to fly myself to a meeting, we typically reimburse myself at either the cost that airline travel would be, by car mileage it would be a reasonable drive (using the IRS rate for that). Occasionally have we reimbursed at the rate the that government reimburses its employees for their general aviation travel.

I can tell you that the third reimbursement rate is the highest, which is attractive, but I believe that Ron Levy says that comparable airline ticket rates are more appropriate for some reason. I do NOT try to fold into the reimbursement any of the real costs of airplane ownership, just the cost-per-mile that is available on some government site (which does work out to better than typical avgas expense, just as the car mileage rate is higher than the car gas used).

Wells

 

[Henning]

If she can, the best all around way to go about this is to have the company reimburse her the price of her the cost of commercial travel. It won't pay the whole tab but it doesn't sound like that's what you're after. That would be handled the same as always on your taxes.

 

[AdamZ]

Wow very interesting question! If your wife wa the pilot I'd say no brainer. If your wife was an owner I'd also say no brainer. Now if your family drove to the meeting in the family car that was only in your name I'd still think that is not an issue as your wife is capable of driving your care assuming she has a DL.

Since your wife is not a PP she's not capable of flying your plane to the meeting and while it gives pause to think I also don't think it would be an issue. When it comes to what to call a business expense or deduct thats more difficult. If the airline ticket is a good measure then print out the price you get on the airlines website and hold it in your tax file. If you were a renter or a club member that would be easy I'd would just use the wet hourly rate that you pay.

The issue of a pilot being reimbursed pops up and I'm not saying it is a problem just that the scenario gets the mental gears turning, ie is it actually your husband being reimbursed for flying you? Probably not but the question is a good one thanks for posting it.

 

[JimNtexas]

From an income tax point of view, direct expenses of business travel that are ordinary and common are deductible under the Internal Revenue Code section 162a.

My wife is an Enrolled Agent, she owns and operates a large tax practice. She is very conservative as to what deductions she will take on our income tax forms. (I'm also an Enrolled Agent, but am not currently practicing.)

A few times a year I travel on business using aircraft belonging to the ownership flying club to which I belong. I always deduct the direct operating costs of these flights. This is easy for me, because our club bills monthly for fixed costs, our hourly rate covers only direct operating costs.

I suspect that in an audit of this case the examiner would need be convinced that this trip wasn't an attempt to deduct the cost of flying the family on a vacation.

Because there have been cases where the IRS has challenged this kind of deduction I'm always careful to document the business purpose of my trips. The courts have been good about support travel deductions for private aircraft where the traveler has good records and justification for this mode of travel.

Here is some background information that might be helpful.