Pilots n Paws tax deduction

Ron Levy said:
Agreed, but since they can't take a deduction for a charitable donation they didn't make (FBO's are not a charitable organization, at least, not in the IRS's mind), the issue moot. The only way they can take a deduction is if they donate the money to PnP and then PnP has the kid make the flight, and then it does become an FAA issue as the kid is receiving compensation for providing pilot services to PnP for piloting on a flight for which they are paying and the kid has no common purpose.
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I never suggested they give the money to PnP directly. If they did, then yes, I agree it's a violation.

However, the situation is going to go like this:

Kid drops off dogs at KABC
FAA guy ramp checks him.
"What are you doing?"
"Volunteer flight for Pilots N Paws."
"Oh, OK. Can I see your pilot certificate and paperwork?"
​
Kid drops parent's credit card on the ground.

"This isn't your credit card."
"Oh, I know, my parents pay for all my flying expenses."
"Man, you are one lucky kid, I wish I had that sort of deal when I was your age. Paperwork all looks good, keep the oily side down."
​

It is NOT going to go


"This isn't your credit card."
"Oh, I know, my parents pay for all my flying expenses."
"Did they take a tax deduction on this flight?"
"I don't know they tax year isn't over yet, I don't know what they are going to do."
"Well, I am going to call my friend at the IRS to keep a look-out because if they do take a tax deduction, you are in violation of 61.113 and I will make sure you never fly again."
​


And on the IRS side.

"You took a deduction for $325.68, what was this for?"
"Oh, that was expenses for a Pilots N Paws charity flight."
"Are they a 501(c)(3)?"
"Yes, they are."
"Oh, OK."
"Did you make the flight?"
"No, our son did, we pay for all of his flight expenses, just be be nice."
"Did you go on the flight?"
"No."
"Hmmmm, I'm going to have to run this by my supervisor and see if that's actually deductible because 526 is sort of a grey area, and for $300 I don't really feel like spending a bunch of time on this, but if you were on the flight, you could be considered crew. Were you on the flight?"
"Yes."
"OK."
​

It is not going to go:

"You took a deduction for $325.68, what was this for?"
"Oh, that was expenses for a Pilots N Paws charity flight."
"Are they a 501(c)(3)?"
"Yes, they are."
"Oh, OK well did you make the flight?"
"No, our kid did the flying, we pay for all his flight expenses."
"Well, that's a violation of 14CFR61.113, I'm going to call my friend over at the FSDO to make sure your kid gets his certificate suspended."
​
 
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Ron Levy said:
Yeah, right. Aerial dog handler, perhaps? :rolleyes: And even if you do, Dad is still not providing the air transportation -- the kid is.

If you want to try any of this yourself once you have some kids, you do that. But please don't suggest anyone else try it unless you know it's legal. I think it's not, and while I don't have a legal paper saying so, I'm sure enough that it isn't that I'm saying don't try this unless you get a legal authority to say it's OK, and laying out the regulatory reasons I see why I think the IRS/FAA (as applicable to the various choices) will say it's not.

Good luck.
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From IRS Publication 526
Deductible travel expenses. These include:
Air, rail, and bus transportation.

The dad paid for the air transportation.
 
EdFred said:
I never suggested they give the money to PnP directly. If they did, then yes, I agree it's a violation.

However, the situation is going to go like this:

Kid drops off dogs at KABC
FAA guy ramp checks him.
"What are you doing?"
"Volunteer flight for Pilots N Paws."
"Oh, OK. Can I see your pilot certificate and paperwork?"
​
Kid drops parent's credit card on the ground.
"This isn't your credit card."
"Oh, I know, my parents pay for all my flying expenses."
"Man, you are one lucky kid, I wish I had that sort of deal when I was your age. Paperwork all looks good, keep the oily side down."
​
It is NOT going to go
"This isn't your credit card."
"Oh, I know, my parents pay for all my flying expenses."
"Did they take a tax deduction on this flight?"
"I don't know they tax year isn't over yet, I don't know what they are going to do."
"Well, I am going to call my friend at the IRS to keep a look-out because if they do take a tax deduction, you are in violation of 61.113 and I will make sure you never fly again."
​
And on the IRS side.
"You took a deduction for $325.68, what was this for?"
"Oh, that was expenses for a Pilots N Paws charity flight."
"Are they a 501(c)(3)?"
"Yes, they are."
"Oh, OK."
"Did you make the flight?"
"No, our son did, we pay for all of his flight expenses, just be be nice."
"Did you go on the flight?"
"No."
"Hmmmm, I'm going to have to run this by my supervisor and see if that's actually deductible because 526 is sort of a grey area, and for $300 I don't really feel like spending a bunch of time on this, but if you were on the flight, you could be considered crew. Were you on the flight?"
"Yes."
"OK."
​
It is not going to go:
"You took a deduction for $325.68, what was this for?"
"Oh, that was expenses for a Pilots N Paws charity flight."
"Are they a 501(c)(3)?"
"Yes, they are."
"Oh, OK well did you make the flight?"
"No, our kid did the flying, we pay for all his flight expenses."
"Well, that's a violation of 14CFR61.113, I'm going to call my friend over at the FSDO to make sure your kid gets his certificate suspended."
​
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Pure fantasy.
 
EdFred said:
From IRS Publication 526
Deductible travel expenses. These include:
Air, rail, and bus transportation.

The dad paid for the air transportation.
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No, the dad paid for the kid's flight time. If the dad paid for air transportation, then the party the dad paid would provide air transportation, not the use of a plane for several hours, and the kid would not be flying it (unless he was a pilot for the 135 operator providing air transportation for hire). In reality, the kid provides the air transportation. Follow the money, follow the air transportation being donated, and you'll see it just doesn't work.

And with that, I'm done
 
Ron Levy said:
Pure fantasy.
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You mean in your world the FSDO and IRS routinely talk to each other to try and bust private pilots for violating 61.113? It must suck to try and enjoy life in your world.
 
Thanks for the replies. There seems to be a lot of gray area on the subject and while I can't imagine someone from the FAA asking about it, all it would take is my parents being audited to find the discrepancy. I do file my own taxes, just don't make enough not to get it all back in April. So that route is out as well.
 
I'm gonna call the IRS after work and ask.
 
"Let me transfer you to the deductions department."
"OK, Thank you."
Beep-crackle-beep
(hold music)
Automated voice: "We estimate your hold time to be greater than...30 minutes"
 
EdFred said:
"Let me transfer you to the deductions department."
"OK, Thank you."
Beep-crackle-beep
(hold music)
Automated voice: "We estimate your hold time to be greater than...30 minutes"
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:rofl::rofl::lol::lol::rofl::rofl:..

That call must have placed to a US government office based in Salisbury, MD.....:yes:
 
I frequently sleep with one of the top Enrolled Agents in Texas.

I called her up, and she graciously took time away from her busy practice of representing taxpayers in audits and providing litigation support to attorneys involved in Tax Court cases.

The conversation went something like this:

Me: A son is a pilot. His parents pay for his flying. The son rents a plane and flies a mission for Pets and Paws. Can the parent deduct the cost of the plane rental?"

TaxGal: Did the parents pay for the plane directly?

Me: No, that would be an illegal charter. The parents gave the money to their son, who put it in his checking account and paid for the flight with his check.

TaxGal: Then no, only the son could take the deduction. If he files a schedule A. Which I bet he doesn't. But the parents need to consider gift tax [gift reporting discussion redacted].

Me: Suppose the parents just go down the local airport, charter and plane and pilot, and pay for this charter pilot to make the Pets and Paws flight? Because they love animals.

TaxGal: Then the parents could deduct the cost of the charter as charitable contribution.

Me: Suppose the son flew the flight, but the parents put the rental on their credit card and took the deduction.

TaxGal: If the parents paid for the flight they could deduct the expense as a charitable contribution.

Me: Suppose they were audited.

TaxGal: Deductions for airplanes, boats, and horses are often audited.

Me: Ok suppose the IRS auditor asks the parents who flew the airplane. They answer 'our son'. The auditor says 'you can take the deduction, but I'm going to call my friend in the FAA and ask about this, because it sounds like a FAR 134.9 illegal charter'.

TaxGal: Won't happen. IRS auditors don't have friends.
 
Ron Levy said:
And what happens if your kid's license is suspended by the FAA for accepting compensation for a flight for which s/he has no common purpose? Will your mea culpa make the FAA waive that? Is that tax deduction that important to you that you take it rather than let your child have it?
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I don't believe that would happen.
 
Well, well, well. Would you look at that? Thanks Jim!

When I pass through Austin, I will buy you a steak dinner.
 
JimNtexas said:
I frequently sleep with one of the top Enrolled Agents in Texas.

I called her up, and she graciously took time away from her busy practice of representing taxpayers in audits and providing litigation support to attorneys involved in Tax Court cases.
...
Me: Suppose the son flew the flight, but the parents put the rental on their credit card and took the deduction.

TaxGal: If the parents paid for the flight they could deduct the expense as a charitable contribution.

...
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Turn that flight into a car as I discussed above (parents buy car, give car to kid, then kid then gives car to charity), and ask TaxGirl if the answer changes. If she says yes, please ask her what makes a payment for purchase of a vehicle different from a payment for use of a vehicle in this context.
 
Ron Levy said:
Turn that flight into a car as I discussed above (parents buy car, give car to kid, then kid then gives car to charity), and ask TaxGirl if the answer changes. If she says yes, please ask her what makes a payment for purchase of a vehicle different from a payment for use of a vehicle in this context.
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Totally different animal. He's not giving tangible goods. Face it, you're wrong. Dance puppet, dance!
 
EdFred said:
Totally different animal. He's not giving tangible goods. Face it, you're wrong. Dance puppet, dance!
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I was right on at least two out of three, and I don't see where a provision of a service is different than gift of tangible goods in this context -- or do you have something that says otherwise?
 
Ron Levy said:
I was right on at least two out of three, and I don't see where a provision of a service is different than gift of tangible goods in this context -- or do you have something that says otherwise?
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http://www.pilotsofamerica.com/forum/showpost.php?p=1084703&postcount=51

If you look in IRS publication 526, it doesn't even address airplane usage deductions, only donation of the airplane itself.

So to sum up.
The kid will not get busted on 61.113 because the parents aren't saying "you have to fly for PnP"
The parents are good to deduct if they pay the FBO directly (or it's their plane).
 
EdFred said:
http://www.pilotsofamerica.com/forum/showpost.php?p=1084703&postcount=51

If you look in IRS publication 526, it doesn't even address airplane usage deductions, only donation of the airplane itself.

So to sum up.
The kid will not get busted on 61.113 because the parents aren't saying "you have to fly for PnP"
The parents are good to deduct if they pay the FBO directly (or it's their plane).
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Ain't buyin' that from you. If TaxGirl says the same, I'll admit you are right on that one out of three.
 
Ron Levy said:
Turn that flight into a car as I discussed above (parents buy car, give car to kid, then kid then gives car to charity), and ask TaxGirl if the answer changes. If she says yes, please ask her what makes a payment for purchase of a vehicle different from a payment for use of a vehicle in this context.
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Actually I'm an Enrolled Agent also. Just not a real good one, but I can answer that.

First there are a lot of ifs, ands, and buts concerning donating cars to charity.

If the kid's name is on the title of the car then he can donate the car to the charity. Let's assume the car is worth more than $500. To take the deduction the kid needs to get a statement from the charity stating what they did with the car. If the charity sold the car the kid can deduct the gross sales price. Unless the charity used the car for a while before they sold it. Or unless the charity spent some money to improve it and then sold it. It's very confusing.

If the parent's name is on the title of the car then substitute 'parents' for kid in the above paragraph. Also, the same rules apply for donating boats or airplanes.

Would it help if the weather was IFR, so the kid rented an SUV to transport the animal? Then the deduction would go to the party that directly paid for the SUV rental.

Oh, and one more tidbit. A few years ago someone in the FAA got the idea in his head that if a private pilot took a legal tax deduction for use of an airplane then that pilot had been compensated and was therefore in violation of FAR 61.

All the various public benefit flying organizations rose up in arms, and got an interpretation from the FAA that tax deductions for public benefit flying are not compensation.
 
Ron Levy said:
Ain't buyin' that from you. If TaxGirl says the same, I'll admit you are right on that one out of three.
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Jim just said so above!!
Me: Suppose the son flew the flight, but the parents put the rental on their credit card and took the deduction.

TaxGal: If the parents paid for the flight they could deduct the expense as a charitable contribution.
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And we didn't disagree on the other 2 once we separated that the parents were paying the kid who was then paying the FBO. We both agree, no deduction allowed there. And there was no quid pro quo with the parents and the kid, so no 61.113 violation. We do agree that it they paid PnP who then rented the plane that would be a violation of 61.113
 
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There is a big difference in the tax code for deducting the value of donated property and deducting out of pocket costs incurred while supporting an approved charity.

See IRS Pub 526, Table 2 for the rules on deducting out of pocket expenses.
 
JimNtexas said:
There is a big difference in the tax code for deducting the value of donated property and deducting out of pocket costs incurred while supporting an approved charity.

See IRS Pub 526, Table 2 for the rules on deducting out of pocket expenses.
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I read through a lot of 526 this afternoon. Interesting stuff in there.
 
The way I see it is that whoever is taking the tax deduction needs to pay [in this case] the flying club directly for the Pnp flight. You guys certainly dug deeper into the issue than I did. Appreciate it!
 
Jim: You might ask TaxGirl what happens when the parents show up with the letter of acknowledgement for the donation, and the letter is addressed to someone other than themselves, as PnP sends that letter to the pilot who did the flight.
 
Ron Levy said:
Jim: You might ask TaxGirl what happens when the parents show up with the letter of acknowledgement for the donation, and the letter is addressed to someone other than themselves, as PnP sends that letter to the pilot who did the flight.
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IRS auditors are usually happy just with a receipt, but I (and I'm sure Taxgal) would advise a client not to claim the deduction if the charity could not provide an acknowledgment with that taxpayer's name on it.
 
JimNtexas said:
IRS auditors are usually happy just with a receipt, but I (and I'm sure Taxgal) would advise a client not to claim the deduction if the charity could not provide an acknowledgment with that taxpayer's name on it.
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Which I am sure if you called or wrote PnP and said, "hey, we paid for that flight our son did, could you make out a receipt indicating that for tax purposes" I am sure PnP would add their names to the receipt. I know our 501(c)(3) would.
 
EdFred said:
Which I am sure if you called or wrote PnP and said, "hey, we paid for that flight our son did, could you make out a receipt indicating that for tax purposes" I am sure PnP would add their names to the receipt. I know our 501(c)(3) would.
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Good idea -- create proof of a 61.113 violation. Yeah, I know, the IRS won't report it and it's not likely to end up in the FAA's lap, but the fact that you're not likely to get caught doesn't change the legality. At the end of the day, you have to ask yourself whether this savings of maybe $50 in taxes is worth messing with the law. Choose wisely.
 
Ron Levy said:
Good idea -- create proof of a 61.113 violation. Yeah, I know, the IRS won't report it and it's not likely to end up in the FAA's lap, but the fact that you're not likely to get caught doesn't change the legality. At the end of the day, you have to ask yourself whether this savings of maybe $50 in taxes is worth messing with the law. Choose wisely.
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You already stated earlier that what the kid chooses to do with any of the flying his parents pay for is not a violation. I know you hate to be wrong, and you're grasping at straws to save face, and hate to be showed up by someone who wasn't even born yet when you started flying, but it's OK, the world won't end because Ron Levy doesn't know everything fracking thing about flying. It's OK to admit it. Really, it is. And you might even be able to relax enough so that oak tree you're carrying around inside you, won't affect your gait anymore.
 
EdFred said:
You already stated earlier that what the kid chooses to do with any of the flying his parents pay for is not a violation. I know you hate to be wrong, and you're grasping at straws to save face, and hate to be showed up by someone who wasn't even born yet when you started flying, but it's OK, the world won't end because Ron Levy doesn't know everything fracking thing about flying. It's OK to admit it. Really, it is. And you might even be able to relax enough so that oak tree you're carrying around inside you, won't affect your gait anymore.
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Let me explain this again another way. If they give him the money, he can do whatever he likes with it, but then they don't get the tax deduction -- he does. If they pay for the flight directly so they get the deduction, then he is not paying his pro rata share of the flight, and he is in violation of 61.113. The FAA may never hear of it, and the FSDO may not care much if they do, but if you ask FAA Legal, I am reasonably sure they will agree with me.

And I can make that point without getting personal.
 
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Ron Levy said:
Let me explain this again another way. If they give him the money, he can do whatever he likes with it, but then they don't get the tax deduction -- he does. If they pay for the flight directly so they get the deduction, then he is not paying his pro rata share of the flight, and he is in violation of 61.113. The FAA may never hear of it, and the FSDO may not care much if they do, but if you ask FAA Legal, I am reasonably sure they will agree with me.

And I can make that point without getting personal.
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So you're changing your previous stance where you said the FAA said it's OK, or at least isn't going to care if parents pay for their kids flights? If the parents are giving the kid a credit card in the parents name the kid is never paying for his share - ever. I also doubt that the kids flying their parents owned aircraft is paying for 100% of the flight cost. Hell, I've flown my dads plane without putting fuel in it while my sister and uncle rode along when we attended a funeral in Indianapolis. The horror! The horror! I'm in violation, get the pitchforks!!

Whether he's the only one on board, or he's taking his younger sister for a ride, or if mom and dad ride along say, "hey lets go see aunt Betty in Paducah," He's already in violation if that's the case. You stated that was not the case when parents pay for their kids flying - directly or indirectly. So the kid is already in violation whether it's PnP flight or not. So why does taking the tax deduction up to a year after the fact suddenly bust the kid? He was never paying for the flight anyway since it went right on his parents credit card. He was already in violation according to your new stance.
 
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