F

f16weav

Member
Probabaly not a new theard....but thinking of ways to budget, pay or reduce some of the $80K needed for a RV 8 kit. Has anyone in the RV world set up their kit plane at a business or LLC? Tax issues? Deductions, etc? I believe you can't use an Exerimental plane as a "commerical" plane..charge for training like formation flying or intro to aerobatics ..correct? Any other thoughts on legal ways to have Uncle Sam help pay for part of the kit, tools, insurance?

How about a partnership? Splitting the cost with one or two others is a no brainer but can you set up the partnership as a "club"? How about inusurance? Do you need to have seperate coverage liability or hull?

Any and all inputs are appreciatied!

Cheers,

SW
 
I dont' know that 80k is *needed* for an -8... it may be desired.... Stein posted a nice little story on how he built a -6 for 28k total.. following some of those ideas would make a much bigger difference than looking at uncle Sam's share.
 
Also realize that you don't have to purchase the whole she-bang at once. Time is on your side, so you can buy what you need when you need it.

I guess that has been one advantage to my taking over 7 years to get my 6A even close to being done!


Regards,
 
Taxes

It's true that you cannot use an experimental airplane for commercial purposes however you can use one for part 91 personal transport. As such if your business requires you to travel you may purchase and use an airplane for that purpose and subsequently take part of the expences as a deduction every April 15th. So far as I know the IRS doesn't care a lick if the airplane is certified or experimental. Of course you'd want to consult with your accountant as to what you can actually deduct. It may only be operating expences which obviously would do you no good during the build phase.

I used to have a set of keys to a friends Mooney. He once told me he was able to write off almost everything he put into the plane as long as 33% of his use of the plane was business related. That is only what he told be though and should be considered hear-say. If you're required to travel at all for work you might want to talk to your accountant though.
 
taxes

How about the CFI who uses his RV-7 to check out other "newbie" RV pilots? I need to email some of these guys, but can first...how does he get paid if his RV-7 is experimental? How about all the other expenses to keep that plane flying?

Another example, what about the builder assist programs? Can they write off tools, hangar space, insurance?

I know most of these questions need to be addressed to a CPA.

Keep the inputs coming.

SW
 
OK, Here's one idea...

I wrote this tongue in cheak last year on the old forum, and a bunch of people immediately labeled me an unpatriotic tax cheat ;) . Nevertheless, in the interest of pointing out how "interesting" our government rules and tax laws have become, here is a thought experiment for you...

I make my living as an Aerospace Engineer (easily verfied by the government, since that's who I work for...). My college degree says I specialized in aircraft design and testing. The tax laws say that I can deduct expenses for education that helps me do my current job better (but not education that would help me get a better job - go figure!). I think it would be hard to argue that building and test flying an airplane with your own two hands wouldn't make you a better engineer!

Now the FAA allows us to build and license our homebuilt, experimental airplanes as long as they were built for recreational and EDUCATIONAL purposes - right?

So.....the FAA defines the process of building and flying an Experimental Aircraft as educational, and the IRS says that I can deduct education expenses (in my field) from my taxes....right? Soooo..... doesn't it logically follow that my $90K (still unpainted!) RV-8 is a tax write-off?! :D

Of course, when I showed this highly logical pattern to my friendly tax accountant, she just laughed and said "you can put down anything you want on your tax form... that doesn't mean you'll win at the audit!"

Darn, there's just no reward for original thinking these days.... I wish some tax person could show me exaclty where it says that I couldn't do this, so I can stop thinking about it.....

And no folks, I haven't tried it - I'd rather just stay quiet so that the dragon doesn't notice me.... :rolleyes:

Paul
 
taxes

That's kind of like my plan to write off my engine by saying it was an alternate power source for my office!

I suppose my plan to take pictures of my RV, hang them in my office, and then write off the RV as "office decorations" won't work either!

So much for creative thinking ;)
 
taxes and LLC

Let me kick this horse a bit more....Several years ago I formed a LLC when I purchased a British Bulldog...It's Experimental type..low wing, aero, IFR w/ an IO-360 on the nose. T-37 with a 200 horsepower and prop.. Great plane but a bit too slow when compared to a RV.

Anyway...Not unlike many corporate jet owners, I formed the LLC in Delaware with plans of using the plane as a "intro to aero", "up side down" and formation trainer. I had a business plan for such a thing and part of my expeneses were a "legal" IRS write off (CPA tells me!). Well..long and short...9-11 hit, ADIZ clap down in Wash DC, big pay cut at work and I had to sell the Bulldog. Bottom line and the reason for the post....According to my CPA, LLC worked with the Bulldog. I'll run it by my CPA again and ask the question using an "unbuilt" RV kit, but still am looking for inputs from the RV world if they have had similiar experience or just suck it up and pay full retail.
 
Tax write-off? Yes.

Mornin' everybody,
As most of you saw, we finally flew N33PL on Friday and I do intend to write off my half (I have a partner), giving flight instruction to new RV buyers/builders. The FAA regs allow a waiver for using an experimental airplane for paid flight instruction/transition training if you are an EAA member or a member of NAFI (Nat'l assoc of flight instructors). EAA has the form available for download on their website. One primary requirement is that your restriction is flown off the airplane and you are a CFI. However, if you are not a CFI, my belief is that you can rent your RV and let someone who IS a CFI give transition training in it. The FAA and EAA are adamant in that you are not trying to skirt the regs and the privilege by giving 'joyrides' and calling them 'transition training'. I don't intend to slide into the gray area, am a CFI and will wait 'til our restrictions are flown off. Until then, however, I intend to treat it as a business venture with depreciation and so on. I'm seeing my CPA soon and will follow with another post.
Regards,
Pierre
 
f16weav said:
How about the CFI who uses his RV-7 to check out other "newbie" RV pilots? I need to email some of these guys, but can first...how does he get paid if his RV-7 is experimental? How about all the other expenses to keep that plane flying?
SW
Click to expand...

I can explain how Mike Seager does it. I got a check out with him in 477RV. This aircraft is registered to Van's, but not has an amatuer-built. It's registered as experimental, crew training/market survey. That's how he's able to get paid to do the training. I haven't looked through the regs lately, but I believe there are additional limitiations when registered as this type of experimental. Same goes with just about all warbirds that are classified as "experimental", just a different type of experimental.
 
Insurance with a partner

Pierre,

Thanks for your inputs.

How about insurance with your partner? I could call Avemco or someone else, but do you each pay your own hull and liability? or can you pay together on an RV like a certified GA aircraft or flying club type A/C? I think finding the right partner (like finding the right mate) could be the way to go!

SW.
RV-8 preplans ordered!
Measuring garage.... :D
 
I don't think there is a problem with multiple pilots (partners) on an insurance policy as long as the number is reasonably small. I have two partners with my Debonair. The policy price went up some having more than one pilot, but the real cost difference will occur if one or more partners is low time. It looks like the policy price is driven by the lowest denominator experience and total time.

In my case the 90K hull with full liability went from ~$1400 to ~2400 when I picked up two partners. The agent indicated that one of the new partners who had high time and mucho experience (as I) caused no premium change, but the other low time pilot with very limited retact and essentially no make/model time drove the large increase. As his experience grows, our rates should drop.

Of course another consideration is the pros/cons of having partners. I feel very comfortable with good partners on the Deb. But I would not go for partners with the experimentals that I built and flew prior to the Deb (BD4 and a One Design). The Deb is a traveling machine. The experimentals were sport planes and I flew them as the "whim" hit me.

Deene
 
The glass is half full

deene said:
In my case the 90K hull with full liability went from ~$1400 to ~2400 when I picked up two partners....Deene
Click to expand...

Or perhaps you should look at it as your insurance went down from $1400 to $800 a piece. Your hanger costs and maintenance costs are going down by 2/3s as well. Yes I know there is more wear and tear on the plane, but having a plane flying is better than having it sit in a hangar.

I think partnerships are very worthwhile if one can find the right people. However, like marriages partnerships are seldom 50/50. If you go into one with the intentions of giving more than you receive, they can be very beneficial.
 
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