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Business use of Aircraft

JDanno

Well Known Member
I'm at the stage of my life where I've flown off Phase one of my RV-10 and will put on a couple of hundred hours this year that is involved in my new (3 years old) business that requires a lot of travel.
My question is about writing off expenses, depreciation, etc. on my taxes. Anybody have experience with this that point could point me in the right direction? My CPA knows nothing about airplanes and readily admits it. I have talked to several attorney/consultants that have booths at Oshkosh and S-n-F but they all are geared to larger operations and want thousands of $$ before talking to you.
Help! Thanks!:confused:
 
As an aviation journalist, I use my own aircraft for travel related to business, and the best thing I can say is to keep very good records. Oh, and expect to be audited! We have been successful in getting the IRS to understand our expenses by keeping track of mileage (you get something like $1.31 per statute mile for personal aircraft use if you want to claim mileage - check each year for the rate), dates of travel, and having chart printouts that prove the mileage. It helps to have receipts for fuel or lodging/food to prove that you were where you said you were. We print out copies of our pilot logbooks (legal documents according to the FAA) and aircraft activity logs. Keep it all for the audit!

Paul
 
Over 30 years I used my airplanes for mostly business travel. Every nickel spent was noted in a ledger; hangar, fuel & oil, charts & supplies, insurance, maint., etc. All business hours were tracked, about 200 per year. At the year end everything was totaled, business hours versus personal calculated (85% business average). It could be argued some expenses could be deducted in full but my CPA was conservative, provide the IRS with a little more than enough info and don't try to get away with anything you don't deserve. He would provide a sheet every year showing the expenses, business use hours and %. Depreciation was handled in a similar manner. Paul is correct, airplane on a tax form is a red flag. Your return will be looked at by someone every year. I never got any kick back on mine.
 
Another option is call the IRS. I have had the need to call them several times over the years and each time was quite suprised to find that the person on the other end was knowledgable, helpful, freindly and more importantly had the answer "from the horses mouth". If you Google IRS Help phone you get 800-829-1040.
 
Could you quote the document that states the mileage for aviation?
If I understand correctly then the mileage takes the place of trying to record all the various expenses and proportioning them out as to use? Can you also use depreciation IF you use the mileage method?
Thanks, big help!
 
I haven't used the deduction in over 20 years, but when I did, there was a rate for cars, a rate for motorcycles, and a rate for privately owned aircraft (I think it also included 'leased' (rented) a/c).

It was the taxpayer's choice whether to use the 'standard mileage rate' or calculated expenses, depreciation, etc.

Basically the same options as a car used for business, but with the higher rate for a/c or lower rate for motorcycles.

Charlie
 
Have You Capitalized the Aircraft?

Could you quote the document that states the mileage for aviation?
If I understand correctly then the mileage takes the place of trying to record all the various expenses and proportioning them out as to use? Can you also use depreciation IF you use the mileage method?
Thanks, big help!

Can't depreciate an asset unless you've capitalized it. You need to talk to your accountant. I suspect he'll tell you that unless your business is substantial, and you really need the depreciation and plan to use the aircraft entirely for business, it's likely not worth the hassle. You'd probably need a certified appraisal on the front end and then will have to deal with a capital gain when you try to dispose/sell it. If you assigned a low value for tax purposes when you registered the aircraft, that may set the depreciable value, further reducing its benefit to the business. Some of the posters that have already commented can easily verify the legitament use of their A/C for business, but are merely taking a mileage expense (backed up by detailed records). I'd suggest following their lead. As Paul implied earlier, base your record keeping on the assumption that business use of your plane will likely trigger an IRS audit.
Terry, CFI (not an accountant, but I've stayed at Holiday Inns)
RV9A N323TP
 
All good advice...

I wouldn't depreciate the aircraft itself unless you owned multiple business locations that required you to physically move to and from the business locations on a regular basis, it's that simple. For instance, say you owned multiple Jimmy John franchises in multiple cities and you flew back and forth regularly, you could have your parent corporation own and depreciate the AC for purposes of traveling to each franchise. This is a legit reason. It is not a legit reason for a company to own an AC and depreciate it if it has one location and the plane is used for occasional travel to "meetings." If you are in a situation where you own a business that produces widgets and you need the aircraft to travel around the country for different sales meetings, product fairs/marketing events then I would deduct expenses associated with aircraft usage on a per mile or hourly rate and I would keep meticulous records with the concept that I will have to stand in front of an auditor and prove this. Airplanes and boats are audit triggers. Unless your company has a physical need for an aircraft (multiple locations) don't deduct it. Deduct expenses associated with travel if the aircraft is used for traveling to client meetings, marketing events, sales meetings etc. (just like renting a car).
 
I caution you not to use the anything other than the car rate for expense milage and then at your own risk. The IRS code does not spell out any rate for aircraft milage. I'll offer a $1000 reward for anyone whom can find it. You may use expenses only. Calling the IRS is a joke and your CPA is no help here either. Remember you can expense anything but if they deny your expense you have the burden of proof to justify it.
 
Yup, doesn't appear here:


Seems that some folks may be thinking about the travel expense reimbursement for Government employees that use a personal airplane for government travel:


Well I am not an accountant, or a tax expert of any kind - but the IRS has accepted the GSA reimbursement rate for my travel, even through audits. Of course, I never give advice on tax matters, so it's up to you. And, as has been said before, an hint of Aircraft In your returns may subject them to extra scrutiny.

In this case, "YMMV" almost literally applies..... :)
 
I used it when I worked for USPS, as well. IIRC (it's been 20+ years), I wasn't required to *report* the *reimbursement*, if it didn't exceed the defined mileage rate for that year. Obviously, that's different from taking a deduction. Perhaps it's it's just another example of the legal hair splitting that goes on in lots of areas.

It would be interesting to see what would happen if your corporation reimbursed you at the GSA mileage rate for an a/c, and took the deduction, instead of you taking it as a deduction on your personal return. (Likely a better tax result, anyway, unless you have enough deductions to exceed the standard deduction on your personal return.)

Charlie
 
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