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07-16-2016, 04:05 AM
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Join Date: Jan 2005
Posts: 1,009
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Have You Capitalized the Aircraft?
Quote:
Originally Posted by JDanno
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!
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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
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07-16-2016, 04:44 AM
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Join Date: May 2008
Location: KANE, Hugo, Minnesota
Posts: 765
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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).
__________________
Aaron Arvig
RV-9A
Empennage Done
Wings-In Progress
N568AK Reserved
SOLD?but I'll be back
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07-16-2016, 05:30 AM
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Join Date: Jan 2006
Posts: 307
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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.
__________________
Tad Stripes Sargent
GRT HXr Glass
TITAN POWERED IO-370
Hartzell's advanced composite propeller
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07-17-2016, 07:38 AM
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VAF Moderator / Line Boy
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Join Date: Jan 2005
Location: Dayton, NV
Posts: 12,256
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Quote:
Originally Posted by RV8JD
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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..... 
__________________
Paul F. Dye
Editor at Large - KITPLANES Magazine
RV-8 - N188PD - "Valkyrie"
RV-6 (By Marriage) - N164MS - "Mikey"
RV-3B - N13PL - "Tsamsiyu"
A&P, EAA Tech Counselor/Flight Advisor
Dayton Valley Airpark (A34)
http://Ironflight.com
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07-17-2016, 08:29 AM
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Join Date: May 2006
Location: Pocahontas MS
Posts: 3,884
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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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