Tax implications of airplane ownership

Discussion in 'Flight Following' started by GSDpilot, Oct 9, 2019.

  1. GSDpilot

    GSDpilot Filing Flight Plan

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    Does anybody have any feedback or advice on ownership of a single engine aircraft through your business or just owning it personally? I understand you can depreciate, write off business related travel, etc. Just curious if any business owners out there can share good and bad of owning through your company or if owning personally made more sense.
     
  2. cgrab

    cgrab Pattern Altitude

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    Business travel is deductible whether it is by car or airplane. The mileage charge is in some federal website I'm too lazy to look up.
     
  3. Bell206

    Bell206 Pattern Altitude

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    Every state is different. Best advice is talk to a local CPA and Tax attorney.
     
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  4. Morgan3820

    Morgan3820 Pattern Altitude

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    I sold my airplane to my LLC. My accountant said that I can fully deduct it, so, I did. But yes, talk with a tax accountant
     
    Last edited: Oct 9, 2019
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  5. Clip4

    Clip4 En-Route

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  6. donjohnston

    donjohnston Line Up and Wait

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    Talk to a CPA and a tax attorney.

    One thing that many people miss is that once you fully depreciate it when you do sell it, the sale price becomes a gain.
     
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  7. AGLyme

    AGLyme Pre-takeoff checklist

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    A pal is under an audit presently. The IRS has made it clear that he can write off plane trip costs for himself and his employees, but no friends or family.
    So, the math... if 4 people are in the plane, say his CFO and himself -- and their two wives who are not employees... only 2/4 ths of the trip is a write off.
    Lesson here, make sure your CPA "gets it" re digging in to aviation rules and formulas.
     
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  8. AA5Bman

    AA5Bman Pre-takeoff checklist

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    My impression on this has always been that unless it’s really really really a business tool or you’re willing to push the limits and accept more audit risk than I am, the juice is not worth the squeeze in terms of the benefit to headache trade-off.
     
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  9. Huckster79

    Huckster79 Line Up and Wait

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    They gotta want ya bad to be digging into how many ppl where on board!
     
  10. James331

    James331 Touchdown! Greaser!

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    If you’re in the aviation industry and can make $$ with the plane you probably can get some advantages out of it.

    If you’re NOT in the industry and can’t fly for profit, you might be asking for trouble.

    CPA question, not POA ;)
     
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  11. MuseChaser

    MuseChaser Line Up and Wait

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    For us little guys, i.e., the plane is not actually purchased by and for our business, corporation, or LLC, or whatever, it's probably akin to the home office deduction. Audit fodder, and if you DON'T get audited and/or it's accepted, you have nothing left, after depreciation, to deduct against the sale price when you sell if you take anything other than the aviation equivalent of standard mileage expenses for autos. Not sure that's even a thing.. never bothered to find out. I'm just a VFR guy for now, so flying for business would mean that, living in the NE, 80% of the time, I'd probably miss my gig.
     
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  12. Let'sgoflying!

    Let'sgoflying! Touchdown! Greaser! PoA Supporter

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    In Texas, I know someone who sold the plane to his business, taking it out of the sales tax exemption category, and yup the state found it, made him pay up.
     
  13. Morgan3820

    Morgan3820 Pattern Altitude

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    you can sell a plane for more than you paid for it?

    I worry about a lot of stuff, but, I am not worried about gains selling my plane.
     
  14. donjohnston

    donjohnston Line Up and Wait

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    Of course you can sell a plane for more than you paid for it. :rolleyes:

    However, that's irrelevant. Once you depreciate it, the value of the plane is $0. So if you sell it for a $1,000, that would be a $1,000 gain.
     
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  15. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Not a very creative CPA. It's easy and legal enough to tie the wives to the company.
     
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  16. Stewartb

    Stewartb Final Approach

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    My accountant and attorney advised me to keep my planes private and never spend a company dime on them. That keeps liability personal and not corporate. I asked, they answered. That's not advice, just a pirep.
     
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  17. Morgan3820

    Morgan3820 Pattern Altitude

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    Funny, on the advice of experts I moved ownership of the aircraft to the LLC to make the corporation liable and hopefully remove personal liability.
     
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  18. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Your personal liability is NOT removed if you are the one flying the plane. You are still responsible for your actions. Now if someone else was flying the plane, you should be protected.
     
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  19. StanN45

    StanN45 Pre-takeoff checklist

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    Isn't that why we have insurance?
     
  20. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    A schoolbus full of dead children will blow through your insurance coverage before you can sneeze.
     
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  21. Morgan3820

    Morgan3820 Pattern Altitude

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    I rent out the plane to select individual s so that is my goal.
     
  22. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    In that case its absolutely the right decision. Lot of people think an LLC provides them protection from their own actions
     
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  23. Morgan3820

    Morgan3820 Pattern Altitude

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    Nope. I am always responsible. Just ask my boss, wife, daughter..
    Fortunately I have thick skin and broad shoulders.
     
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  24. StanN45

    StanN45 Pre-takeoff checklist

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    So I guess you have your cars through a corporation or LLC? Same accident could happen with that as well...…..
     
  25. EdFred

    EdFred Touchdown! Greaser! PoA Supporter

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    Nope, because *I* would still be driving it. Corporation provides no protection from my actions. But even a $5MM umbrella policy would be wiped out in a hurry. I supposed I could have a $300MM umbrella policy to be safe...
     
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  26. 1RTK1

    1RTK1 Cleared for Takeoff

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    Why not create a new corporation for the plane?? Of course liability still falls to you if there is an accident you caused, but let the new corporation deal with expenses etc. for the plane.
     
    Last edited: Oct 10, 2019
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  27. Morgan3820

    Morgan3820 Pattern Altitude

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    I read somewhere that 75% of Cirrus aircraft are owned and paid for by small corporations. How else would a regular person have such an expensive item?
     
  28. Stewartb

    Stewartb Final Approach

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    Because my airplanes don't produce revenue. There are no earnings. Just spending.
     
  29. 1RTK1

    1RTK1 Cleared for Takeoff

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    No one said a Corp has to make money.
     
  30. GSDpilot

    GSDpilot Filing Flight Plan

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    This is actually what my CPA advised. Create an LLC for the airplane. It would be reported on my personal tax return (so I don't have the expense of filing seperately). This protects both personal and company assets from an incident with the plane. Create a seperate bank account for the LLC/plane, and charge the business for related travel expenses. I should have clarified that I spoke to a CPA when posting, but wanted to get independent opinions.
     
  31. Sam D

    Sam D Cleared for Takeoff

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    This is probably obvious, but a CPA isn’t the right resource for matters of liability. I’m guessing an attorney’s conclusion to asset protection would be “maybe”
     
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  32. GSDpilot

    GSDpilot Filing Flight Plan

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    You are correct, and my CPA also referred me to an aviation attorney. Waiting to hear back from him...
     
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  33. 1RTK1

    1RTK1 Cleared for Takeoff

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    The corp will "only" protect you from others that fly your plane, it won't protect You from Your accident.
     
  34. Timbeck2

    Timbeck2 Final Approach

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    A friend of mine owns his plane under an LLC and "rents" it to himself. I have no idea how that works but he claims it is a huge tax deduction.
     
  35. donjohnston

    donjohnston Line Up and Wait

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    I did that as well. Except when I started, it was with a club. Then the club folded and I was renting it out directly. But during that time, I paid the same rent as everyone else.
     
  36. tiger

    tiger Pre-takeoff checklist

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    A constantly loss-making entity set up purely to own a personal airplane would likely fall afoul of the IRS's "hobby loss" rule and "losses" would cease to be deductible.
     
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  37. Kenny Phillips

    Kenny Phillips Pattern Altitude

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    I used my personal airplane for company business many times in the mid-1990s; as mentioned, its use is not considered differently from a car. I always travelled alone for business, so no wonky dodges needed for tax purposes. It actually made sense to do this at the time; four of my clients were minutes from airports. I didn't want the company to own the plane; any tax advantages vaporized in the "audit me, please" halo of airplane ownership.
     
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  38. 1RTK1

    1RTK1 Cleared for Takeoff

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    Possibly, but talk to a qualified accountant first..
     
  39. MuseChaser

    MuseChaser Line Up and Wait

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    I considered doing that, but I don't trust myself as far as I can throw me; I'd probably end up taking myself to court.
     
  40. dans2992

    dans2992 En-Route

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    How does the IRS prove who was in the plane??