RV build as a Tax Deduction?

[Gregmarlow]

Hey guys,

I'm looking for some advice here. I'm a professional pilot, American Airlines and for the last few years full time USAF Reservist flying C-17's in Iraq and Afghanistan.

Can I claim the RV build and all things associated with it (tools, etc.) as a professional education expense? I'm learning as I go and I would classify this project as highly educational.

The construction of this plane will definately help me in my professional career, no doubt.

Any ideas? Thanks in advance.

Greg

[Yukon]

You can deduct just about anything, but whether it will hold up under IRS scrutiny is another matter. I think you might have a hard time making that case.

How about deducting it as a business, with a resale in mind after completion?

[John Clark]

There are two things that will raise red flags all over the IRS, pleasure boats and light aircraft. The money saved by the deductiion will not cover the fees charged by the accountant and attorney to get you out of trouble. The only option, as mentioned by Yukon, is a business. Be aware of the "tests" that the IRS will apply to see if it is a real business. They want to see advertising, accounting, insurance, and other items. Interestingly you don't need to make a profit, but you have to show "the intent to make a profit."

John Clark
RV8 N18U "Sunshine"
KSBA

[Mel]

Originally Posted by John Clark

There are two things that will raise red flags all over the IRS, pleasure boats and light aircraft. The money saved by the deductiion will not cover the fees charged by the accountant and attorney to get you out of trouble. The only option, as mentioned by Yukon, is a business. Be aware of the "tests" that the IRS will apply to see if it is a real business. They want to see advertising, accounting, insurance, and other items. Interestingly you don't need to make a profit, but you have to show "the intent to make a profit."

John Clark
RV8 N18U "Sunshine"
KSBA

But then, it wouldn't be an amateur-built. How would you license it? You're gonna have to lie to somebody, one way or the other.

[DGlaeser]

Originally Posted by Gregmarlow

Hey guys,

I'm looking for some advice here. I'm a professional pilot, American Airlines and for the last few years full time USAF Reservist flying C-17's in Iraq and Afghanistan.

Can I claim the RV build and all things associated with it (tools, etc.) as a professional education expense? I'm learning as I go and I would classify this project as highly educational.

The construction of this plane will definately help me in my professional career, no doubt.

Any ideas? Thanks in advance.

Greg

The only time you can take an education deduction is if your employer requires it to maintain your job. My wife is a teacher and has to take classes to maintain her certification, so that's deductable.
If the education is needed or used to get a better job, that's not deductable (or else we'd all be able to deduct our college educations - wouldn't that be great?)
Trying to make it a business may work for the IRS, but that would make you a professional builder, which wouldn't fly with the FAA.
If someone ever figures out a legal way to do this, it will be the hottest advice to ever hit the internet

[tonyjohnson]

John Clark has a very good point about the fees associated with defending your position with the IRS.

I once owned a sailboat that I used in the charter business. I did the legal research to determine how to do it correctly (I am a lawyer). As someone else mentioned in an earlier post, if you try to deduct expenses for a boat or airplane, you can COUNT on an audit.

No problem, I thought. I have done it exactly correctly according to the caselaw established by tax courts. Well, it was indeed a problem. The IRS folks that made the decision at the lower level had no understanding of the details of the caselaw. They ruled against me. It took several layers of appeals before my case finally got to a level where someone understood that I had followed all the rules established by the caselaw. By that time I had spend thousands of dollars in CPA expenses. By the way, the IRS does not even say they are sorry for not understanding their own rules, much less pay your accounting costs to defend a valid claim.

In the end, it turned out to be a wash, or worse. You have to have a sense of humor.

[Ironflight]

I had this same thought a couple years ago....gee, I'm an aeronautical engineer, building an airplane will make me a better one, without qualifying me for another job ....metts the idea of the IRS definition of educational expense. And the FAA DEFINES experimental/amateur built category as "educational....how can I go wrong!!?

My tax accountant friend thanked me for giving her the best laugh of the season....like it was said up above - you might be able to argue this in a tax court, and maybe even win....but you are definitely going to tax court for trying it! Huge red flag....I don't want that kind of scrutiny!

Paul

[Low Pass]

Offering legally allowable for-profit instruction (transition training) would be applicable. Some "marketing" concurrent to your travels might work.

Also, flight testing of homebuilt-specific devices and other goods manufactured by a business should also be applicable.

I took a "marketing" trip to Reno years back under my then current sub-s consulting corporation with no probs.

But doesn't mean I wouldn't get audited if I did it again the exact same way this year.

[Jalanci]

I'm still waiting for the wings to get going again, so I have a while to worry about the capital depreciation. I'm now using a flying club spam can to travel to destinations where I can save time, usually anything over 100 miles or across Long Island. Log book entries are made, I would think this should be as similar to using a car for transportation to a job.

[BlackRV7]

AH.......No/Maybe/Sign this waiver/Do What?/Go Ahead, retainer is due now. Tax Court is extra.

This refers only to the intent of the original question

Please add CPA (to some people this time of year being Certified Pain in the #$%^) to signature line.............now back to reality...............and tax returns:-) Yes, I am starting to get slap happy, come on April 17th.!!!!