SIFL Tax question for small business owners

[Dave]

I'm ready to buy and have finally found good prospects not too far
from me. I'm a small business owner. I've spoken to my accountant
about the tax advantages. He's not a pilot but anything that saves
money is good news to him. I have several clients that are far enough
away to make flying worthwhile. I don't think keeping the business
related use at 25% or more will be a problem. Are there any other
small business owners with airplanes in the $30-100k range that take
advantage of the SIFL formula? Do you feel it's better to own the
plane personally and rent it back to your business?

If the tax code can work for a small business owner like me, it may
make sense to buy a more expensive aircraft.

Dave

[Mike Rapoport]

What is SIFL?

Mike
MU-2


"Dave" > wrote in message
om...
> I'm ready to buy and have finally found good prospects not too far
> from me. I'm a small business owner. I've spoken to my accountant
> about the tax advantages. He's not a pilot but anything that saves
> money is good news to him. I have several clients that are far enough
> away to make flying worthwhile. I don't think keeping the business
> related use at 25% or more will be a problem. Are there any other
> small business owners with airplanes in the $30-100k range that take
> advantage of the SIFL formula? Do you feel it's better to own the
> plane personally and rent it back to your business?
>
> If the tax code can work for a small business owner like me, it may
> make sense to buy a more expensive aircraft.
>
> Dave

[Richard Kaplan]

"Mike Rapoport" > wrote in message
ink.net...

> What is SIFL?

Standard Industry Fare Level --- This is a formula the IRS allows to compute
the value of a private airplane flight by basing it on commercial airline
costs.


--
Richard Kaplan, CFII

www.flyimc.com

[Fred Fillinger]

>>I'm ready to buy and have finally found good prospects not too far
>>from me. I'm a small business owner. I've spoken to my accountant
>>about the tax advantages. He's not a pilot but anything that saves
>>money is good news to him. I have several clients that are far enough
>>away to make flying worthwhile. I don't think keeping the business
>>related use at 25% or more will be a problem. Are there any other
>>small business owners with airplanes in the $30-100k range that take
>>advantage of the SIFL formula? Do you feel it's better to own the
>>plane personally and rent it back to your business?
>>
>>If the tax code can work for a small business owner like me, it may
>>make sense to buy a more expensive aircraft.
>>
>>Dave

Your accountant needs to research whether IRS has conceded that the
SIFL rate for personal use applies also to closely-held corporations.
The rules were written for big companies with big airplanes. Where you
own 100% of the stock, a substance vs. form argument can override about
anything.

Fred F.

[Dave]

Fred Fillinger > wrote in message >
> Your accountant needs to research whether IRS has conceded that the
> SIFL rate for personal use applies also to closely-held corporations.
> The rules were written for big companies with big airplanes. Where you
> own 100% of the stock, a substance vs. form argument can override about
> anything.
>
> Fred F.

Fred, thanks, he is looking into it. Unfortunately, I think your
argument is right on target. It probably won't work for me. I was
wondering if anyone here had used it.

The tax rule basically allows the business to deduct the cost of the
aircraft as long as 25% of it's use is business related and that the
employee's use of the aircraft is payed for by the employee. Proper
documentation of all trips, expenses, etc. is essential. The hourly
reimbursement that employees must pay is based on the sifl formula not
on the actual hourly cost. The sifl formula results in a lower
hourly rate. The employee therefore receives use of the aircraft at
a very attractive rate.

Thanks
Dave