Starting a club

Aztec Driver

Aztec Driver

Line Up and Wait
Joined
Mar 7, 2005
Messages
982
Location
Elizabethtown, PA
Display Name
Bryon
Home Airfield
LNS
So, In the continuing saga of attempting to justify the expenses of my airplane, I am wondering how good starting up a non equity club for a few members would be.

The aircraft would certainly need to be owned by a corporation and have appropriate insurance to cover a club system.

The club I was a member of previously was a very bad example of how to run a club, in my opinion. The owner was a crook and attempted to "extort" money from members for shortages that had nothing to do with either the aircraft or the club.

How are these usually arranged?

These were my thoughts on the arrangement.
1. Each member would pay a membership fee, refundable when they decide to leave.
2. Each member would pay a share of the fixed costs.
3. Each member would pay for the hourly operating costs for the aircraft.
4. Each member would leave the aircraft fuel full at the end of each flight.

I assume the fixed costs should include hangar, insurance, approximate annual cost, and gps updates. Do you add in to this the normal expected yearly maintenance that would be performed with the expected amount of use time, or do you add this into the hourly cost? When my partner and I were splitting costs, we split the hangar, insurance and GPS, and we paid an hourly amount that would take care of the maintenance (including annual) based on what we figure would be the total time in the aircraft for the year. If we didn't fly much or there was more maintenance than expected, it sometimes was not enough to cover it. The engine and avionics reserves then took a hit. That made the person who flew the most, pay the most, which was a bit more fair.

The hourly costs should include expected maintenance, engine reserves and avionics reserves. If the annual and normal expected maintenance is included in the fixed costs, the hourly rate could be considerably lower, especially if it is a dry rate.

How does one deal with maintenance over and above the normal? Since the members, with the exception of myself, would all be non owners, one can't expect them to pony up unexpected costs, like prop failure, or some other unforeseen problem. How does an owner deal with the extra possibility of unforeseen problems that come along with the extra usage of the aircraft?

Some of the problems can be mitigated by carefully selecting pilots from a known pool, or at least ones highly recommended by a trusted source.

Is this a reasonable way to get the aircraft used regularly, and maybe cut some of the costs to everyone? When I was a member of the club, at least at first, it seemed a great way to fly for a lower cost. I had some money invested in the club, the hourly rate was lower than I could rent a lesser aircraft for, and the availability was terrific. Unfortunately, getting the money back from the club after he decided to try to bill us for incidents that happened before we were even members required us to resort to legal means.
 
Watching this thread with interest! I'm curious as well.
 
Corporate ownership may not be the best vehicle. Talk to your tax and legal advisors first.
 
wabower said:
Corporate ownership may not be the best vehicle. Talk to your tax and legal advisors first.
Click to expand...
Why not?

Would not liability be a lot less as a corporation while someone else is at the helm? One could set it up as a not for profit corporation, as long as all requirements are met.
 
The club I joined operates very much as you describe. It was started in the early 1970s, so I guess you could consider it successful.

Your membership is sold (by you or by the club, your choice, club gets a small cut if they sell it for you) to the next member when you leave. Monthly dues are low. There's a per-hour wet rate for each airplane, adjusted periodically for fuel costs. There's also a "dry minimum" charge -- if you don't fly at all during a month, you pay for 1/2 hour on the least expensive plane, currently a 172 @ $80 per hour.

Fixed costs are hangar, insurance, GPS updates, XM WX, etc. There's an engine reserve built in, and the club has enough cash to pay for a major O/H and repairs without sweating it. To my knowledge there has never been a special assessment, certainly not in recent years.

Pilots are expected (required by club rules) to leave the planes clean, fueled per policy (full or to the tabs, depending on the A/C and time of year) and properly hangared. There is a very strong culture of ownership responsibility in the club -- they're YOUR airplanes, so treat it like you own it, not like you're renting it.

It works quite well. I can fly pretty much whenever the mood strikes me for quite a bit less than renting form the FBO. The planes are nicer and the rules are far more relaxed. The club is a not-for-profit corp (don't remember the chapter & verse), and we have a good relationship with a local bank in case a loan or line of credit is needed for something major. Financially the club is in good shape.

I believe AOPA has some resources on line for clubs and people thinking about starting a club, you might check them out.
 
When I was renting the Mooney, it was a non-equity club. I paid monthly dues that amounted to 1/4 (4 members) of the hangar and the insurance (pro-rated). It came out to about $100/month as I recall (this is about 5 years ago). As I said, non-equity club. It worked well because I was good friends with the owners and they basically just wanted to get the plane flying more and paying for some of its keep. They had the plane in an LLC. I then paid an hourly wet rate, and if I was going on a long trip I could get a dry rate. If I had to buy fuel elsewhere on the wet rate, I got reimbursed (well, I got that money taken off my monthly dues).

I think what you have described works pretty well, although you say that the plane stays topped off after every flight, so I assume you'd be charging people dry rate. Not a problem necessarily, unless you wanted to have less fuel for weight purposes. Maybe not an issue. I do agree that leaving the plane full is usually the cleanest way to go.
 
I am part of Metro Flyers here at KDTO. We operate much the same as DaleB describes with his. 16 members around 2 aircraft (1975 C182P and a 1966 V35 Bo), only about 10 are actually flying, and 7 regularly. Modest equity buy-in, reasonable per month to cover fixed, and an affordable per hour wet rate. Standards are to treat the aircraft as your own and return them filled to tabs, cleaned (in/out/wiped down), and properly hangared. Scheduling done via online service.

Group is a Delaware corporation.

AD, if you want a copy of any of our public documents, I'd be happy to share. I think there is a link to the bylaws on our site: www.metroflyersclub.com
 
Bryon, from a liability perspective a corporation or LLC would be preferable however as Wayne stated above there could be tax ramifications that you should consult your CPA about. Also in PA if you form the corporation and transfer the ownership of the Twinkie to the corp then the corp will have to pay sales tax based upon the value of the aircraft. In PA that is going to be 6%.

I have tried to structure this from the other side ie the non equity pilot. The way we planned to structure it was to determine a dry rate for the plane and then we were going to pay a percentage over dry rate. We would pay for our fuel, and the club then charges dues based upon the fixed costs plus a bit of a cushion.

The hourly rate should cover reserves including a Mx reserve. The non equity partners should then guarantee you a specific number of hours per month so you can at least be assured of a minimum amount of money.

As for Mx and annual well the dues should cover things like oil changes. If the left engine craps out, well that would be on you.
 
Aztec Driver said:
So, In the continuing saga of attempting to justify the expenses of my airplane, I am wondering how good starting up a non equity club for a few members would be.

The aircraft would certainly need to be owned by a corporation and have appropriate insurance to cover a club system.

The club I was a member of previously was a very bad example of how to run a club, in my opinion. The owner was a crook and attempted to "extort" money from members for shortages that had nothing to do with either the aircraft or the club.

How are these usually arranged?

These were my thoughts on the arrangement.
1. Each member would pay a membership fee, refundable when they decide to leave.
2. Each member would pay a share of the fixed costs.
3. Each member would pay for the hourly operating costs for the aircraft.
4. Each member would leave the aircraft fuel full at the end of each flight.

I assume the fixed costs should include hangar, insurance, approximate annual cost, and gps updates. Do you add in to this the normal expected yearly maintenance that would be performed with the expected amount of use time, or do you add this into the hourly cost? When my partner and I were splitting costs, we split the hangar, insurance and GPS, and we paid an hourly amount that would take care of the maintenance (including annual) based on what we figure would be the total time in the aircraft for the year. If we didn't fly much or there was more maintenance than expected, it sometimes was not enough to cover it. The engine and avionics reserves then took a hit. That made the person who flew the most, pay the most, which was a bit more fair.

The hourly costs should include expected maintenance, engine reserves and avionics reserves. If the annual and normal expected maintenance is included in the fixed costs, the hourly rate could be considerably lower, especially if it is a dry rate.

How does one deal with maintenance over and above the normal? Since the members, with the exception of myself, would all be non owners, one can't expect them to pony up unexpected costs, like prop failure, or some other unforeseen problem. How does an owner deal with the extra possibility of unforeseen problems that come along with the extra usage of the aircraft?

Some of the problems can be mitigated by carefully selecting pilots from a known pool, or at least ones highly recommended by a trusted source.

Is this a reasonable way to get the aircraft used regularly, and maybe cut some of the costs to everyone? When I was a member of the club, at least at first, it seemed a great way to fly for a lower cost. I had some money invested in the club, the hourly rate was lower than I could rent a lesser aircraft for, and the availability was terrific. Unfortunately, getting the money back from the club after he decided to try to bill us for incidents that happened before we were even members required us to resort to legal means.
Click to expand...

The following is how I think a flying club should be structured. It is based on experience with a very successful non-profit club that is decades old.

If you want to make it a real club then YOU need to lease the aircraft back to the club at a dry rate... and the club rents it at a wet rate to members. You guys could even get a few more members and another plane owner might even think of putting their plane in the club too.. That will give the most utility is having a few planes.. but you have to start somewhere. The club should be its own entity, with its own self-elected leadership, rules and etc..

Your dry rate should include your maintenance reserve and everything else you need to make the aircraft remain safe and desireable to rent. Maintenance above and beyond expected problems is YOUR problem as the owner, or Your insurance company's problem in the event of a claim. If you put in in leaseback and it blows a piston through the cowl the first week, thats YOUR expense,not the clubs. The owner picks the mechanic. And pays the mechanic.

Plan on 100 hour inspections, required or not, because thats the best way to stay on top of little maintenance problems.

Leaving it fully fueled is an option. As is fuel reimbursement. The club pays the fuel bill. Keep in mind some planes cant do full seats and full fuel, and full fuel can be a liability in that circumstance. Have a mechanism in place for the plane to be left short fueled for planned trips with full seats. The club I was with for years reimbursed fuel at the rate charged at the home field (for that month).

If the pilot refuels elsewhere for cheaper they realize a slight savings.. if they refuel for more expensive elsewhere, the renting pilot bears the cost difference.

Who can instruct in club planes? Who can receive instruction in club planes? Trust me you need to establish this up front. Every club I've ever been with required the CFI and the person being instructed to be club members (and therefore covered under club insurance) and this rule was enforced harshly.
 
Who in the world wants that deal as an owner? Isn't the objective of a club to defray the cost and risk rather than to concentrate it?

Doggtyred said:
The following is how I think a flying club should be structured. It is based on experience with a very successful non-profit club that is decades old.

If you want to make it a real club then YOU need to lease the aircraft back to the club at a dry rate... and the club rents it at a wet rate to members. You guys could even get a few more members and another plane owner might even think of putting their plane in the club too.. That will give the most utility is having a few planes.. but you have to start somewhere. The club should be its own entity, with its own self-elected leadership, rules and etc..

Your dry rate should include your maintenance reserve and everything else you need to make the aircraft remain safe and desireable to rent. Maintenance above and beyond expected problems is YOUR problem as the owner, or Your insurance company's problem in the event of a claim. If you put in in leaseback and it blows a piston through the cowl the first week, thats YOUR expense,not the clubs. The owner picks the mechanic. And pays the mechanic.

Plan on 100 hour inspections, required or not, because thats the best way to stay on top of little maintenance problems.

Leaving it fully fueled is an option. As is fuel reimbursement. The club pays the fuel bill. Keep in mind some planes cant do full seats and full fuel, and full fuel can be a liability in that circumstance. Have a mechanism in place for the plane to be left short fueled for planned trips with full seats. The club I was with for years reimbursed fuel at the rate charged at the home field (for that month).

If the pilot refuels elsewhere for cheaper they realize a slight savings.. if they refuel for more expensive elsewhere, the renting pilot bears the cost difference.

Who can instruct in club planes? Who can receive instruction in club planes? Trust me you need to establish this up front. Every club I've ever been with required the CFI and the person being instructed to be club members (and therefore covered under club insurance) and this rule was enforced harshly.
Click to expand...
 
Doggtyred said:
Leaving it fully fueled is an option. As is fuel reimbursement. The club pays the fuel bill. Keep in mind some planes cant do full seats and full fuel, and full fuel can be a liability in that circumstance. Have a mechanism in place for the plane to be left short fueled for planned trips with full seats. The club I was with for years reimbursed fuel at the rate charged at the home field (for that month).

If the pilot refuels elsewhere for cheaper they realize a slight savings.. if they refuel for more expensive elsewhere, the renting pilot bears the cost difference.

Who can instruct in club planes? Who can receive instruction in club planes? Trust me you need to establish this up front. Every club I've ever been with required the CFI and the person being instructed to be club members (and therefore covered under club insurance) and this rule was enforced harshly.
Click to expand...

Fuel - In our club we have the FBO fuel it, club gets the bill. We actually pay in advance for the average month's fuel bill, I think, and we get a discount. If you fill up elsewhere you're reimbursed at the club's rate. Club pays for oil as well. Maintenance is ongoing, we don't do 100 hour inspections.

There are two CFIs in the club, one of whom is the safety officer. We also have the FBO/flight school on the insurance policy, so those instructors can instruct members in club planes -- but the safety officer (one of the CFIs) has to sign off on new checkouts and solos. I am pretty sure club instructors cannot give instruction to non-members.
 
wabower said:
Who in the world wants that deal as an owner? Isn't the objective of a club to defray the cost and risk rather than to concentrate it?
Click to expand...

That depends on whose perspective you're looking at.
 
When I bought the Comanche I decided to hold on to the Cherokee for a while. I used the Cherokee to keep current and do short hamburger hops and the Comanche for xcountry trips. I had a family member and a good friend who I let both fly the Cherokee for free and they felt they should pay something so they agreed to split 100% of the Cherokee insurance, hangar rent and annual and variable maintenance plus their own fuel/oil expense. The total cost was less than $4000 a year split 2 ways, plus their fuel burn. The next year a 3rd guy came in and so they split the $4000 3 ways. We had a $10 per hour variable maintenance reserve and these guys liked working on the plane almost as much as flying it so they brought the condition of the plane up with TLC IMO.

This worked so well that after a few years when i finally decided to sell the Cherokee the group of guys asked if they might do the same thing with the Comanche? They all had at least 200 hrs and agreed to get whatever was required by the insurer before flying solo or carrying pax.

The topic of major maintenance came up and they wanted protection from any big things which seemed reasonable to me so I told them to each pay $250 per month into the corporate acct and that would allow up to $3500 for an average annual and maintenance, $1440 hangar rent and the rest would just go into a reserve and hopefully we wouldn't need it. So we put away about $9k and that annual was $2000 and hangar $1440 so it left nearly $6k in the reserve the first year. I told them if this happened two or three years in a row I would likely use the left over reserve to add an autopilot to the plane and/or upgrade the Gps 89B to a 430W. Although I would be on the hook for anything major unless it was caused by abuse and or not covered by insurance. Everyone thought this was fair.

IN the few years we did this I only flew about 50 hrs a year and each of them flew about 50-75 hrs each per year. so it worked out for me as I did not pay the costs for a few years, my contribution was the opportunity cost I have in the purchase price and improvements I had already made to the plane. (no payments or loan).

I felt I could trust these guys since one was an A&P friend and another was a IA who worked for Cessna Jet sales and treated the Cherokee perfectly and was a big help on the NEP maintenance and the last one was my brother.

Each of them could quit the club anytime for any reason with 30 days notice. Just as I could cancel it or terminate anyone of of them for any reason with no notice and refund unused days in that month. We only had a letter of understanding written from me detailing the costs and responsibilities of each party. No contract.

The guys did the annual with the opinion of a 2nd IA (not in the club) signing off and I credited ea mechanic half the cost of the annual labor what the annual would have cost had I paid the local FBO towards their accts so they were able to reduce their total $3k contribution membership fee.

In addition, They each paid 1/3 of the $1100 insurance and each of them had to get 20 hrs before solo or carrying pax.

Having two mechanics fly the plane regularly they found and fixed things that would have gone missed by myself and my regular IA but I was glad to have the extra attention on the plane. The 2nd Annual with the group was $400 in parts and those were discretionary. So it I feel it was a great deal for all of us and the condition of the plane actually went up thanks to the extra attention and detail of those flying mechanics.

There were no rules but first come first serve to post on a yahoo calender we setup. They may fly as many or few hours you want, keep the plane for 7-10 days vacation regardless of hours flown and we never ever stepped on each others toes. The plane was always available to all of us without conflict. My brother and I always fly together and do it during the week and the other two always fly weekends and vacation or holidays when we would stay home with our family. It was perfect.

I hope this helps out.

we did not do 100 hr inspections however the guys liked working on the plane weekends that they did not fly. And we left only standard fuel in the plane during summers so we would have additional payload up to 760lbs. In the winter we kept it full of fuel.
 
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As always pilots forums could make this too complicated to want to bother with.

We did not need collect sales tax as it was not a commercial deal it was a cost sharing deal and the county treasurer agreed. Although there was a slight reserve left over at the end of the two years it was not more than an appropriate amount of deprecation would offset for that same period. Third if you get to business like it could cause your owners insurance to bump up to commercial in which case you cannot afford to do the deal with $5500 insurance. So our major concern was setting it up so that up to 1 owner and 3 non equity partners would be on the insurance and not trigger a commercial clause. We wrote our broker and had her letter response on file that the insurance company was aware and approved our use.

AdamZ said:
Bryon, from a liability perspective a corporation or LLC would be preferable however as Wayne stated above there could be tax ramifications that you should consult your CPA about. Also in PA if you form the corporation and transfer the ownership of the Twinkie to the corp then the corp will have to pay sales tax based upon the value of the aircraft. In PA that is going to be 6%.

I have tried to structure this from the other side ie the non equity pilot. The way we planned to structure it was to determine a dry rate for the plane and then we were going to pay a percentage over dry rate. We would pay for our fuel, and the club then charges dues based upon the fixed costs plus a bit of a cushion.

The hourly rate should cover reserves including a Mx reserve. The non equity partners should then guarantee you a specific number of hours per month so you can at least be assured of a minimum amount of money.

As for Mx and annual well the dues should cover things like oil changes. If the left engine craps out, well that would be on you.
Click to expand...
 
wabower said:
Who in the world wants that deal as an owner? Isn't the objective of a club to defray the cost and risk rather than to concentrate it?
Click to expand...

True the way we setup and it worked out I had a bit left over in the reserve account. But had we burnt up a turbo, waste gate or something else expensive it could have gone the other way. However putting the excess into the plane for the guys use was acceptable to me even if I had to pony up some major maintenance later down the road as I had a somewhat improved A/C.

We are all still friends after we broke up the NEP and everyone feels that they were treated fair. The two guys downsized to a 172 club and my brother helps me out when he can but it doesn't really matter as I am going to keep the plane one way or another.
 
I'm in a non-equity club with the clipped wing cub. The airplane is in the owner's name. He pays all the bills and takes care of the maintenance. I, and the other club members are named insured on the airplane's insurance policy. Each month I pay my share of the fixed costs (hangar plus insurance).

I then pay $27/ tach hour dry and we all leave the plane full of fuel when we finish flying it.

If you are not having more than 2-3 other pilots, it is probably best to do the same. Get good insurance, and get them on the insurance policy. The insurance company can break down the cost for you according to the pilot history of each, so you can divide the costs accordingly. I had to pay extra my first year because I was a tailwheel newbie.

In the eyes of the insurance company, 1 owner 3 other pilots is the max number which keeps it from becoming a commercial operation. Then its just a partnership, which is less expensive to insure.
 
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Anybody who's considering a new club while thinking that old clubs should be the model might want to re-think the situation from several viewpoints.

Some are:

1. What techniques and vehicles are now available that are superior to those used in the past? If the new stuff had been available 30 years ago, would the old clubs have been structured as they were back then?

2. Who wants to spend the time and money to futz with another set of books and tax return?

3. What's the value of the pass-through benefits that might be available, and how are they best conveyed to the owners?

4. Why burden an incoming member with the need for due diligence, reps and warranties and other prudent-man paperwork that would be indicated in such an investment?

5. Are the overall GA economic environment (as in everything you can think of) are significantly different than 30 years ago? Are estimated residual values different? MX prices? Engine prices? Economic exposure to the owner(s)?
 
Tony_Scarpelli said:
As always pilots forums could make this too complicated to want to bother with.

We did not need collect sales tax as it was not a commercial deal it was a cost sharing deal and the county treasurer agreed.....
Click to expand...

I wasn't referring to sales tax on the hourly use of the plane but rather if Bryon transfers the plane from him self to a corporate entity in PA ( where he lives and the plane is based) he will incur sales or use tax of 6% on the tranfer from his name to the corp or LLC EVEN if he controls 100% of the corp or LLC.
 
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Tony_Scarpelli said:
When I bought the Comanche I decided to hold on to the Cherokee for a while. I used the Cherokee to keep current and do short hamburger hops and the Comanche for xcountry trips. I had a family member and a good friend who I let both fly the Cherokee for free and they felt they should pay something so they agreed to split 100% of the Cherokee insurance, hangar rent and annual and variable maintenance plus their own fuel/oil expense. The total cost was less than $4000 a year split 2 ways, plus their fuel burn. The next year a 3rd guy came in and so they split the $4000 3 ways. We had a $10 per hour variable maintenance reserve and these guys liked working on the plane almost as much as flying it so they brought the condition of the plane up with TLC IMO.

This worked so well that after a few years when i finally decided to sell the Cherokee the group of guys asked if they might do the same thing with the Comanche? They all had at least 200 hrs and agreed to get whatever was required by the insurer before flying solo or carrying pax.

The topic of major maintenance came up and they wanted protection from any big things which seemed reasonable to me so I told them to each pay $250 per month into the corporate acct and that would allow up to $3500 for an average annual and maintenance, $1440 hangar rent and the rest would just go into a reserve and hopefully we wouldn't need it. So we put away about $9k and that annual was $2000 and hangar $1440 so it left nearly $6k in the reserve the first year. I told them if this happened two or three years in a row I would likely use the left over reserve to add an autopilot to the plane and/or upgrade the Gps 89B to a 430W. Although I would be on the hook for anything major unless it was caused by abuse and or not covered by insurance. Everyone thought this was fair.

IN the few years we did this I only flew about 50 hrs a year and each of them flew about 50-75 hrs each per year. so it worked out for me as I did not pay the costs for a few years, my contribution was the opportunity cost I have in the purchase price and improvements I had already made to the plane. (no payments or loan).

I felt I could trust these guys since one was an A&P friend and another was a IA who worked for Cessna Jet sales and treated the Cherokee perfectly and was a big help on the NEP maintenance and the last one was my brother.

Each of them could quit the club anytime for any reason with 30 days notice. Just as I could cancel it or terminate anyone of of them for any reason with no notice and refund unused days in that month. We only had a letter of understanding written from me detailing the costs and responsibilities of each party. No contract.

The guys did the annual with the opinion of a 2nd IA (not in the club) signing off and I credited ea mechanic half the cost of the annual labor what the annual would have cost had I paid the local FBO towards their accts so they were able to reduce their total $3k contribution membership fee.

In addition, They each paid 1/3 of the $1100 insurance and each of them had to get 20 hrs before solo or carrying pax.

Having two mechanics fly the plane regularly they found and fixed things that would have gone missed by myself and my regular IA but I was glad to have the extra attention on the plane. The 2nd Annual with the group was $400 in parts and those were discretionary. So it I feel it was a great deal for all of us and the condition of the plane actually went up thanks to the extra attention and detail of those flying mechanics.

There were no rules but first come first serve to post on a yahoo calender we setup. They may fly as many or few hours you want, keep the plane for 7-10 days vacation regardless of hours flown and we never ever stepped on each others toes. The plane was always available to all of us without conflict. My brother and I always fly together and do it during the week and the other two always fly weekends and vacation or holidays when we would stay home with our family. It was perfect.

I hope this helps out.

we did not do 100 hr inspections however the guys liked working on the plane weekends that they did not fly. And we left only standard fuel in the plane during summers so we would have additional payload up to 760lbs. In the winter we kept it full of fuel.
Click to expand...

This is the nature of the club I had originally been involved with. I had wished to structure it somewhat like this, but I am concerned with liability with leaving the aircraft in my own name, while allowing others to fly it.
 
OK got you... but we do not have sales tax on sales of classic aircraft sold between individuals or legal entity when a broker or dealer is not involved.

AdamZ said:
I wasn't referring to sales tax on the hourly use of the plane but rather if Bryon tranfers the plane from him self to a corporate entity in PA ( where he lives and the plane is based) he will incur sales or use tax of 6% on the tranfer from his name to the corp or LLC EVEN if he controls 100% of the corp or LLC.
Click to expand...
 
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I went to the KS state org website and paid $80 to setup a LLC to buy the airplane and the LLC owns it so if someone else has an accident they can go after the LLC or insurance but not the members of the group or NEP's who use it.
The plane is listed with FAA registration as Aviate, LLC

Aztec Driver said:
This is the nature of the club I had originally been involved with. I had wished to structure it somewhat like this, but I am concerned with liability with leaving the aircraft in my own name, while allowing others to fly it.
Click to expand...
 
AdamZ said:
I wasn't referring to sales tax on the hourly use of the plane but rather if Byron tranfers the plane from him self to a corporate entity in PA ( where he lives and the plane is based) he will incur sales or use tax of 6% on the tranfer from his name to the corp or LLC EVEN if he controls 100% of the corp or LLC.
Click to expand...

The newly enacted tax laws in Pa regarding aviation do not change the sales/use tax for the transfer of the aircraft, do they? Can one sell the aircraft to the entity for any amount one wishes, or does it need to be at fair market value?
 
Does the state have an exemption for transfer to a single-member LLC?
 
Lots of information here but one thing I have not noticed is a recommendation that you check and see if and how your state regulates flying clubs.

Probably start with the state dept of transportation or whoever regulates airports. Same-o talk to the sales tax people. Finally, talk to an attorney or CPA about federal and state income tax status. Worst case is you will be a taxable commercial operation, but there may be better cases available if you jump through the right bureaucratic hoops.

If there are any big local clubs in the area, their officers will probably have some path-smoothing ideas for you. Talking to small clubs is fine, but they may not actually be doing all the legal stuff right. I know that several in our area are not.
 
airdale said:
Lots of information here but one thing I have not noticed is a recommendation that you check and see if and how your state regulates flying clubs. Talking to small clubs is fine, but they may not actually be doing all the legal stuff right. I know that several in our area are not.
Click to expand...

I guess it is possible some states my attempt to regulate flying clubs but it seems to me federal jurisdiction.

Do you have any examples?
 
I guess it is possible some states my attempt to regulate flying clubs but it seems to me federal jurisdiction. Do you have any examples?
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Searching "regulation of flying clubs" and "'flying clubs' regulations" I got:

http://arcweb.sos.state.or.us/pages/rules/oars_700/oar_738/738_035.html

digitool.library.mcgill.ca/thesisfile72536.pdf (elderly, hard to read, but addresses your point fairly directly.)

http://mn.gov/elicense/licenses/licensedetail.jsp?URI=tcm:29-2884&CT_URI=tcm:27-117-32

http://www.tampaairport.com/about/general_aviation/policies/D330.00.03.pdf

www.co.eau-claire.wi.us/residents/CODE/docs/TITLE_12.pdf‎

http://webserver.rilin.state.ri.us/BillText/BillText00/HouseText00/H7789.htm
 
Same tax issues may/will/can apply no matter what kind of endeavor/business is involved. Can you think of any reasons why KS might be friendly towards GA?
Tony_Scarpelli said:
I guess it is possible some states my attempt to regulate flying clubs but it seems to me federal jurisdiction.

Do you have any examples?
Click to expand...
 
So, revisiting this thought.

Since there are very few twins on the rental market, and considering engine reserves would be pretty steep with the engines at around 1400 hours, what is a reasonable price for a twin engine airplane?

My thoughts were to have a limited partnership at around 4 people total, with a 5-10 percent buy in (to satisfy the insurance requirement of ownership for the partners) splitting the hangar, insurance, and annual 4 ways, and having a "dry" rental with everyone keeping the tanks full after they are finished.

The only thing I hate is having to repay the sales tax just to put it into a corporation.
 
Aztec Driver said:
So, revisiting this thought.

Since there are very few twins on the rental market, and considering engine reserves would be pretty steep with the engines at around 1400 hours, what is a reasonable price for a twin engine airplane?

My thoughts were to have a limited partnership at around 4 people total, with a 5-10 percent buy in (to satisfy the insurance requirement of ownership for the partners) splitting the hangar, insurance, and annual 4 ways, and having a "dry" rental with everyone keeping the tanks full after they are finished.

The only thing I hate is having to repay the sales tax just to put it into a corporation.
Click to expand...

Around here a Seminole rents about $290hr wet, that's the best deal on one.
 
Around me (DC area) there's a twinkie for $260/hr and a Cougar for $255/hr, both wet (I think?).
 
With four people total you don't need to have members buy in to the aircraft. I'm named insured on two privately owned aircraft policies and I don't own any part of either of them.


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dell30rb said:
With four people total you don't need to have members buy in to the aircraft. I'm named insured on two privately owned aircraft policies and I don't own any part of either of them.


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Click to expand...

Yep, most 'normal' policies allow for up to 5 named insureds.
 
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