Question about taxes

Discussion in 'Hangar Talk' started by SixPapaCharlie, Feb 21, 2020.

  1. SixPapaCharlie

    SixPapaCharlie May the force be with you

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    So I got my 1099 tax form or whichever form from youtube.

    I gave it to my CPA and he said "Don't you have expenses like cameras, fuel, and other things that go along with this that you'd deduct from these earnings?"

    I am under the impression that I cannot do that. Maybe I am wrong but If I deduct fuel costs am I not in a sense making money of flying? Feels like a bad idea but I don't know what the rule really is.
     
  2. 455 Bravo Uniform

    455 Bravo Uniform En-Route

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    Your income minus your expense is your profit.

    You deduct your expenses to figure out how much you made.

    It’s not like sales tax where you pay tax on your revenue.

    -NOT a CPA.
     
  3. write-stuff

    write-stuff En-Route

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    Heck, deduct everything remotely related. Gas, Avgas, cameras, your home internet bill.
     
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  4. Ventucky Red

    Ventucky Red Cleared for Takeoff

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    Was the 1099 less than $1000.00? If so just pay the taxes...

    As for deductions, yes you can deduct anything that was spent for the production of the videos you produced and posted to YouTube even if they flopped.. But keep accurate records...

    In my past life I use to work as an independent contractor and was 1099 for everything... Expenses are black hole that the IRS has been working on diligently to fill over the years.... I got audited one year because I did an accelerated cost recovery depreciation on a car I bought specifically to do the job and was only going to keep for the length of the project... apparently this didn't look kosher to them and those nice boys and girls from the IRS invited me in for a conversation on accounting methods. I think it was the first time thy ever saw and excel spreadsheet... yes, it was that long ago... In the end all was good....
     
  5. eman1200

    eman1200 Touchdown! Greaser!

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    I say p!ss off as many three letter organizations as possible, the FAA, IRS, MI6.... actually you'd get a pretty good deduction on just the fuel you use driving back and forth to the FSDO. but they say u can deduct fuel, I don't think they say what kind of fuel.
     
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  6. geezer

    geezer Pre-takeoff checklist

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    The question at the top of the list is whether 6PC is a commercial pilot.

    If yes, many deductible expenses.
    If no, they are not legal from the FAA point of view, no matter what the IRS may say.
     
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  7. PaulS

    PaulS Final Approach

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    Sounds like you are concerned about keeping the your activities outside the realm of a commercial pilot, which is a valid concern in my opinion.
     
  8. Ventucky Red

    Ventucky Red Cleared for Takeoff

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    May be splitting hairs here... he is not being paid for the flying, he is being paid for the videos....

    I can deduct the gas for my car why can't I deduct the gas for an airplane....
     
  9. write-stuff

    write-stuff En-Route

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    Ok, so maybe don't deduct the cost for the avgas, but everything else, heck yeah. Editing software, internet monthly fees, car mileage.
     
  10. flyingron

    flyingron Touchdown! Greaser!

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    Whatever you do, don't post a video explaining how you're hiding your income from the taxman. If you think the FAA doesn't have a sense of humor...
     
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  11. Dave Theisen

    Dave Theisen En-Route PoA Supporter

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    Just don’t make a Facebook post tagging the IRS and you’ll be fine. :)
     
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  12. SixPapaCharlie

    SixPapaCharlie May the force be with you

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    HAHA!!!!!
    I wasn't drinking anything so I just spit air all over my screen.
     
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  13. SixPapaCharlie

    SixPapaCharlie May the force be with you

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    Yes. I'd love to deduct stuff but not if it violates one of them pro rata type rules.
     
  14. Dana

    Dana Cleared for Takeoff

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    You're being paid for the videos, not the flying. So don't deduct your fuel, but deduct hangar rent, cameras, computer, etc. But even the fuel should be deductible, since you're not "carrying persons or property for compensation or hire".
     
  15. Van Johnston

    Van Johnston Cleared for Takeoff

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    How much did you make off me watching that 5 minute CBD commercial?

    (actually I let it play while I went to the bathroom)
     
  16. TCABM

    TCABM Cleared for Takeoff

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    Or tag the IRS office on FB discussing ‘creative’ solutions.
     
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  17. PaulS

    PaulS Final Approach

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    Don't know where you get the answer for that, I'd say ask your FDSO friends, but on the other hand you don't want to invite scrutiny.
     
  18. Kenny Phillips

    Kenny Phillips En-Route

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    I'd listen to my CPA, rather than some guys on the internet.
     
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  19. SixPapaCharlie

    SixPapaCharlie May the force be with you

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    My CPA doesn't know any of the rules about Aviation
     
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  20. Ravioli

    Ravioli Final Approach

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    Yup. Pay up and shut up is the best advise @SixPapaCharlie will ever get.

    If you think the FSDO is a fun ride, strap in for the IRS and see what they think of your humor. Much more to lose there than your certs.
     
  21. Hang 4

    Hang 4 Line Up and Wait

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    Read post #1 - his CPA started it :).

    Think the question is about how not to cross the boundary into commercial flight
     
  22. SixPapaCharlie

    SixPapaCharlie May the force be with you

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    where did I threaten to do anything humorous? I'm trying to figure out what is the right thing to do here to avoid getting into trouble mycpa saying right this stuff off and I'm wondering if that's violating a regulation.
     
  23. Ravioli

    Ravioli Final Approach

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    Explain how a flight is not for compensation but the costs of recording it are.

    But, since you're at the FSDO every other week anyway you can just ask them.
     
  24. PeterNSteinmetz

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    I suspect this is a hard question that would require some serious research to figure out precisely.

    Easiest would be if there is some type of opinion letter on the subject from the FAA.

    But the answer here from the FAA’s perspective may not depend on whether you deduct or not. You have made the income in either case. I suspect that deducting matters not at all to the FAA.

    And certainly your expenses are related to the production of the income which makes them deductible per the IRS.

    If you consider the YouTube videos a business, then is the flying merely incidental to the business? Since the purpose of the videos is aviation humor, they may think the flying is commercial. Sort of like if you were flying a stunt plane in a movie.

    I suspect a consult with an aviation attorney and obtaining a letter of opinion may be the best course here. This may cost in the range of $1-2k.
     
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  25. hindsight2020

    hindsight2020 En-Route

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    std deduction FTW.
     
  26. Salty

    Salty Final Approach PoA Supporter

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    Is flying incidental to a business creating videos about flying?

    Seriously though, this makes my head hurt. If it's not legit to write-off the gas for the flights used making videos for profit, then how is it legit to make those videos for profit in the first place? If that is legit, then I would think deducting the fuel would be also.

    I just read my own post and it just made my head hurt more.
     
    Last edited: Feb 22, 2020
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  27. MooneyDriver78

    MooneyDriver78 En-Route

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    Careful, you can’t deduct 100% if you use it for other things...internet being an example. Cameras you can, avgas for that flight only, etc.
     
  28. PaulS

    PaulS Final Approach

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    I think the FAA would be very foolish to rule against putting videoed flights on youtube videos as far as compensation goes, the flying is the easiest part of the process, the work is done on the ground and takes many hours. As a returned rusty pilot these videos absolutely relit the fire for me and are in general bringing massive interest back into GA.
     
  29. simtech

    simtech En-Route

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    My CPA says don't keep track of fuel receipts, take the mileage deduction as its better. I use MileIQ and track all my personal and business mileage...oh and guess what? It tracks me when I fly too. So take the mileage and forget the gas, avgas, whatever.

    And to be clear I do NOT track my plane flying at all, has nothing to do with my business.
     
  30. OneCharlieTango

    OneCharlieTango Pre-takeoff checklist

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    Maybe AOPA Legal could help.
     
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  31. ja_user

    ja_user Pattern Altitude

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    Taking aerial photographs is a commercial operation, tread carefully. You might not like the answer.
     
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  32. Ventucky Red

    Ventucky Red Cleared for Takeoff

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    So I take some aerial videos post them to a social network site and get a check because I drove traffic there would be considered a commercial operation?
     
  33. ja_user

    ja_user Pattern Altitude

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    The FAA doesn’t care where you drive. It does care if you fly for compensation and aerial photography is clearly a part 91 commercial operation. This has been furthered more recently with drones being considered commercial if videos are posted to YouTube and obtaining ad revenue, requiring part 107 certification.

    This doesn’t mean the IRS/tax code won’t allow it, they don’t care if you violate FARs. And the FAA isn’t going to care what the IRS says, although they may factor it into a complaint.

    It would be easy to comply with one agency and run afoul the other.
     
  34. jbarrass

    jbarrass Line Up and Wait

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    The FAA and IRS do not even attempt to integrate rules.

    For the FAA, if they cared at all, I think would be more focused on the income than the expenses, and you're already there. But it seems to me like you're a video producer that incidentally uses planes.

    For the IRS, they need to be reasonable and ordinary and in furtherance of the business, I just use the GSA rates when I fly for business. Collect all your expenses and let your CPA put them in the right bucket.
     
  35. cowman

    cowman En-Route

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    Former Holiday Inn guest here...

    The issue with the FAA would be if the profit made was incidental to the flight or not- therefore deciding whether or not commercial cert is required. I don't know the answer, I vaguely remember the issue having come up for other youtubers but this end is all FAA. The FAA doesn't care what you do with taxes though as far as I know.

    As far as the IRS is concerned if you made money then you owe taxes. If you had legitimate expenses involved in making said money then that gets deducted because you don't get taxed on gross income, you get taxed on profit(gross - expenses). The IRS does not know or care what the FAA issues may be.

    If issues came up could one agency poll the other? I suppose, but if the FAA has a problem with you making money they're not going to care about your taxes other than another bit of proof you made money... and you HAVE to report to the IRS if you made money. I'm not an IRS expert either but again I know the basics of reporting non-wage income because I do it every year and if you had legitimate expenses in making your money then by all means deduct them.
     
  36. Warlock

    Warlock Cleared for Takeoff

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    If your making money using Aviation videos would you not be in the same place if you took a deduction or not. Seems like if your intent is to help pay the note and hanger rent your on the edge of a commercial operation anyway. Perfectly harmless and incidental in my book but maybe not to the clowns at the FAA...
     
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  37. steingar

    steingar Taxi to Parking

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    I hope to Odin you don’t joke on your taxes like you do everything else.
     
  38. Sac Arrow

    Sac Arrow Touchdown! Greaser!

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    Can someone give the Cliffs Notes version
     
  39. cowman

    cowman En-Route

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    This is the IRS we're talking about. Anything less than multiple pages of text probably IS the Cliffs Notes version.
     
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  40. Jumpmaster

    Jumpmaster Pre-takeoff checklist

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    I think you are getting confused. Your YouTube series is a business. The intent is to generate revenue through viewers and subscribers, if not product sales (“merch”), etc. The topic you have chosen for your business product centers somewhat around aviation or some reasonable facsimile thereof but it’s not aviation per se. Your business model is to sell through YouTube a product called humor about aviation -related topics. I would approach it as a business and deduct those expenses allowed for a business. I am not a CPA but a worn out lawyer who won’t touch a tax case anymore.