questions on business use of my personal aircraft

[Bob]

For those of you using your plane for business...

1. What is the tax deductable rate for hourly use of aircraft (e.g.
for cars it is $.36 a mile I believe)?

2. Is it better to own my aircraft personally (to prevent the
aircraft being owned by the company in the event of a lawsuit) and
then have the business (LLC) "rent" from me personally for a certain
amount? How much is this "rent" and is it based on actual costs or
future costs (overhaul, etc)? Taxwise I will have to declare the rent
as income if it is more than my operating costs, right? But the
business gets to claim it as an expense, right? But how to convince
the IRS of the actual and future costs of aircraft ownership?

3. Any good books, publications, or literature you can point me to
that address this specific subject?

4. I'm fairly new to owning my own business (LLC- I've had a very
small sole proprietorship in the past). Can any of you recommend good
info to read up on that is specific to LLCs particularily in the area
of sheltering personal property and how to get the most out of the LLC
tax wise?

5. What are your experiences with using the aircraft for business
(cost wise) and has it penciled out for you?

6. One last question since you've been so darn good to hang in there
this long :) ... top three tips for a new small business owner?

Thanks a bunch folks!

Bob

[Bob Gardner]

I suggest that you get advice from a tax professional, not from a
newsgroup...there is too much at stake.

Bob Gardner

"Bob" > wrote in message
om...
> For those of you using your plane for business...
>
> 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> for cars it is $.36 a mile I believe)?
>
> 2. Is it better to own my aircraft personally (to prevent the
> aircraft being owned by the company in the event of a lawsuit) and
> then have the business (LLC) "rent" from me personally for a certain
> amount? How much is this "rent" and is it based on actual costs or
> future costs (overhaul, etc)? Taxwise I will have to declare the rent
> as income if it is more than my operating costs, right? But the
> business gets to claim it as an expense, right? But how to convince
> the IRS of the actual and future costs of aircraft ownership?
>
> 3. Any good books, publications, or literature you can point me to
> that address this specific subject?
>
> 4. I'm fairly new to owning my own business (LLC- I've had a very
> small sole proprietorship in the past). Can any of you recommend good
> info to read up on that is specific to LLCs particularily in the area
> of sheltering personal property and how to get the most out of the LLC
> tax wise?
>
> 5. What are your experiences with using the aircraft for business
> (cost wise) and has it penciled out for you?
>
> 6. One last question since you've been so darn good to hang in there
> this long :) ... top three tips for a new small business owner?
>
> Thanks a bunch folks!
>
> Bob

[Jim Weir]

1. Recognize a dead horse, take it outside, and bury it with the least possible
ceremony. If you can't shoot your own lame horse, take in a business partner
who can.

2. The business might cost you every penny you have in the bank, your house,
and your marriage. If you can't accept this, don't start the business.

3. If you ain't the lead dog, the scenery is all the same.

Jim



->6. One last question since you've been so darn good to hang in there
->this long :) ... top three tips for a new small business owner?


Jim Weir (A&P/IA, CFI, & other good alphabet soup)
VP Eng RST Pres. Cyberchapter EAA Tech. Counselor
http://www.rst-engr.com

[[email protected]]

In rec.aviation.owning Bob > wrote:
> For those of you using your plane for business...

> 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> for cars it is $.36 a mile I believe)?

Don't know.

> 2. Is it better to own my aircraft personally (to prevent the
> aircraft being owned by the company in the event of a lawsuit) and
> then have the business (LLC) "rent" from me personally for a certain
> amount? How much is this "rent" and is it based on actual costs or
> future costs (overhaul, etc)? Taxwise I will have to declare the rent
> as income if it is more than my operating costs, right? But the
> business gets to claim it as an expense, right? But how to convince
> the IRS of the actual and future costs of aircraft ownership?

Don't know, you need a tax attorney familiar with aircraft for real
information.

If the company rents the plane, you can't deduct maintenance.

If you rent the plane, the company can deduct maintenance.

But again, you need an attorney to make sure whatever you do isn't
concidered tax evasion by the IRS.

> 3. Any good books, publications, or literature you can point me to
> that address this specific subject?

Nolo Press would probably be the place to start.

> 4. I'm fairly new to owning my own business (LLC- I've had a very
> small sole proprietorship in the past). Can any of you recommend good
> info to read up on that is specific to LLCs particularily in the area
> of sheltering personal property and how to get the most out of the LLC
> tax wise?

When I set up my LLC, I did it through an attorney who gave me the
legal lecture as part of the deal.

For $100, I got the accounting lecture from a real accountant.

I'd suggest you go see one of each unless you are one, but you probably
wouldn't be asking these questions here if you were.

The biggest point they both made was to NEVER mix business and
personal stuff of any kind or the "protection" of a LLC isn't
worth spit if you find yourself in a courtroom.

> 5. What are your experiences with using the aircraft for business
> (cost wise) and has it penciled out for you?

For my business, the accountant said don't even try other than for
business transportation. Since I haven't had anywhere near a legitimate
business reason to fly anywhere, I haven't bothered with it.

It will depend on what kind of business you are in; that's why you
pay a real account about $100.

> 6. One last question since you've been so darn good to hang in there
> this long :) ... top three tips for a new small business owner?

Watch your cash flow.
Watch your cash flow.
Watch your cash flow.

> Thanks a bunch folks!

> Bob

You also need a real set of books, though these days they will probably
be electronic. I used Quickbooks which the accountant highly recommended.

Most accountantss these days use Quickbooks and for a small fee ($50 for
that) the accountant blessed how I had set them all up (after a few changes).

--
Jim Pennino

Remove -spam-sux to reply.

[dave]

Bob,
I own a small plane that I also use for my business. I don't know the
specifics but it's basically rented from me at the hourly cost for
business use. I think my accountant included real expenses in the
hourly cost like fuel, oil, insurance, maintenance, tie down, etc. He
did not include in the hourly rate any money for future maitenance like
$10/hour towards the engine overhaul. I'm not convinced he did it the
best way but he's a conservative guy and so am I. Quite frankly, it's
not that much money no matter how you look at it. He also looked into
the SIFL rules in the tax code. Although I can meet the requirements
for SIFL, he didn't think it made sense for an inexpensive aircraft like
my Citabria.

I use my plane to serve clients I already had that were a two or three
hour drive versus a 45 minute flight. I've read that buying a plane
with the intention of using it for distant marketing adventures,
attending seminars, etc. may not pass muster.

Most important - talk to an accountant!

Dave

Bob wrote:
> For those of you using your plane for business...
>
> 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> for cars it is $.36 a mile I believe)?
>
> 2. Is it better to own my aircraft personally (to prevent the
> aircraft being owned by the company in the event of a lawsuit) and
> then have the business (LLC) "rent" from me personally for a certain
> amount? How much is this "rent" and is it based on actual costs or
> future costs (overhaul, etc)? Taxwise I will have to declare the rent
> as income if it is more than my operating costs, right? But the
> business gets to claim it as an expense, right? But how to convince
> the IRS of the actual and future costs of aircraft ownership?
>
> 3. Any good books, publications, or literature you can point me to
> that address this specific subject?
>
> 4. I'm fairly new to owning my own business (LLC- I've had a very
> small sole proprietorship in the past). Can any of you recommend good
> info to read up on that is specific to LLCs particularily in the area
> of sheltering personal property and how to get the most out of the LLC
> tax wise?
>
> 5. What are your experiences with using the aircraft for business
> (cost wise) and has it penciled out for you?
>
> 6. One last question since you've been so darn good to hang in there
> this long :) ... top three tips for a new small business owner?
>
> Thanks a bunch folks!
>
> Bob

[Roger Halstead]

On 30 Apr 2004 15:39:24 -0700, (Bob) wrote:

>For those of you using your plane for business...
>
Bob already gave the best advise...get a tax attorney.

>1. What is the tax deductable rate for hourly use of aircraft (e.g.
>for cars it is $.36 a mile I believe)?

I can tell you what they told me... 10 years ago, but get a tax
attorney. <:-)) The rules and regulations change too often to go by
anything other than current.

"I was told" (remember it was 10 years ago) that I could deduct the
actual cost of the flight (UP TO the cost of a non discount, coach
class airfare between the closest airports to departure and
destination.

>
>2. Is it better to own my aircraft personally (to prevent the
>aircraft being owned by the company in the event of a lawsuit) and
>then have the business (LLC) "rent" from me personally for a certain

Do you want them to take every thing in the company or every thing you
own?

>amount? How much is this "rent" and is it based on actual costs or
>future costs (overhaul, etc)? Taxwise I will have to declare the rent
>as income if it is more than my operating costs, right? But the

In this case (remember my information is 10 years old) you would have
to declare it all and then deduct the operating costs.

>business gets to claim it as an expense, right? But how to convince
>the IRS of the actual and future costs of aircraft ownership?

Under some circumstances you can claim the aircraft as part of the
business and expense it. In addition you can claim the operating costs
(up to that coach class fare...per passenger), but not over the actual
operating cost..

OTOH if you do expense the aircraft and it is completely written off
over so many years, when you sell it ALL of the selling prices in
classed as income.
>
>3. Any good books, publications, or literature you can point me to
>that address this specific subject?
>
>4. I'm fairly new to owning my own business (LLC- I've had a very
>small sole proprietorship in the past). Can any of you recommend good
>info to read up on that is specific to LLCs particularily in the area
>of sheltering personal property and how to get the most out of the LLC
>tax wise?

Get a good tax attorney or public accountant.

>
>5. What are your experiences with using the aircraft for business
>(cost wise) and has it penciled out for you?
>
>6. One last question since you've been so darn good to hang in there
>this long :) ... top three tips for a new small business owner?

Take a sanity check
If you fail that Get a tax attorney
Run the business, don't let it run you.
>
>Thanks a bunch folks!
>
Good Luck

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair)
www.rogerhalstead.com
>Bob

[Dan Thompson]

> 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> for cars it is $.36 a mile I believe)?

$0.99 or $0.98 a mile, can't remember which, there is a specific provision
for it

> 2. Is it better to own my aircraft personally (to prevent the
> aircraft being owned by the company in the event of a lawsuit) and
> then have the business (LLC) "rent" from me personally for a certain
> amount? How much is this "rent" and is it based on actual costs or
> future costs (overhaul, etc)? Taxwise I will have to declare the rent
> as income if it is more than my operating costs, right? But the
> business gets to claim it as an expense, right? But how to convince
> the IRS of the actual and future costs of aircraft ownership?

In my opinion, you are better off spending money for adequate insurance
coverage than legal advice on how to shield yourself liability-wise. The
truth is that if you are flying on business, and sh*t happens, both your
personal and business assets are at risk no matter how you set it up.

[William W. Plummer]

"Dan Thompson" > wrote in message
m...
>
> > 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> > for cars it is $.36 a mile I believe)?
>
> $0.99 or $0.98 a mile, can't remember which, there is a specific provision
> for it
>
> > 2. Is it better to own my aircraft personally (to prevent the
> > aircraft being owned by the company in the event of a lawsuit) and
> > then have the business (LLC) "rent" from me personally for a certain
> > amount? How much is this "rent" and is it based on actual costs or
> > future costs (overhaul, etc)? Taxwise I will have to declare the rent
> > as income if it is more than my operating costs, right? But the
> > business gets to claim it as an expense, right? But how to convince
> > the IRS of the actual and future costs of aircraft ownership?
>
> In my opinion, you are better off spending money for adequate insurance
> coverage than legal advice on how to shield yourself liability-wise. The
> truth is that if you are flying on business, and sh*t happens, both your
> personal and business assets are at risk no matter how you set it up.

You can check the rate for "use of personal airplane" on
http://www.dtic.mil/perdiem . The mileage allowance cannot exceed the
"customary commercial rate." It's hard to beat fares such as the $29 from
Manchester,NH to Orlando, FL. You can't even taxi to the run-up area for
$29.

[Tony Cox]

"Dan Thompson" > wrote in message
m...
>
> > 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> > for cars it is $.36 a mile I believe)?
>
> $0.99 or $0.98 a mile, can't remember which, there is a specific provision
> for it

You're thinking of the GSA rate that federal employees can get
reimbersed at when using their plane for government business.
Nothing 'official' as far as the IRS is concerned.

[William W. Plummer]

"Tony Cox" > wrote in message
ink.net...
> "Dan Thompson" > wrote in message
> m...
> >
> > > 1. What is the tax deductable rate for hourly use of aircraft (e.g.
> > > for cars it is $.36 a mile I believe)?
> >
> > $0.99 or $0.98 a mile, can't remember which, there is a specific
provision
> > for it
>
> You're thinking of the GSA rate that federal employees can get
> reimbersed at when using their plane for government business.
> Nothing 'official' as far as the IRS is concerned.

Right. But I think IRS will track GSA. Any discrepancy will cause a red
flag. Otherwise, you could write off all your airplance use at $100 per
mile!

[Ron Rosenfeld]

On 30 Apr 2004 15:39:24 -0700, (Bob) wrote:

>For those of you using your plane for business...
>
>1. What is the tax deductable rate for hourly use of aircraft (e.g.
>for cars it is $.36 a mile I believe)?

There is no IRS approved rate for airplanes.

>
>2. Is it better to own my aircraft personally (to prevent the
>aircraft being owned by the company in the event of a lawsuit) and
>then have the business (LLC) "rent" from me personally for a certain
>amount?

You should really check with an attorney regarding this. But I'd imagine
that if the company is sued, any of it's assets would be at risk. Assets
of the company's employees should not be at risk, but that may depend on
your precise relationship to the company. If you own the company, it may
not make any difference -- but check with an attorney.

>How much is this "rent" and is it based on actual costs or
>future costs (overhaul, etc)?

The rent is an agreement between you and the company, and it's based on
whatever you and the company decide.

>Taxwise I will have to declare the rent
>as income if it is more than my operating costs, right?

No. You have to declare all of the rent as income. You then get to
declare any expenses incurred in generating that rent as expenses.

>But the business gets to claim it as an expense, right?

Probably -- but check with your tax attorney.


>But how to convince the IRS of the actual and future costs of aircraft ownership?
>

Receipts should document your actual costs. But why do you think the IRS
is interested in your future costs?


>3. Any good books, publications, or literature you can point me to
>that address this specific subject?

I'd check with AOPA, and your legal and tax consultants.

>
>4. I'm fairly new to owning my own business (LLC- I've had a very
>small sole proprietorship in the past). Can any of you recommend good
>info to read up on that is specific to LLCs particularily in the area
>of sheltering personal property and how to get the most out of the LLC
>tax wise?
>
>5. What are your experiences with using the aircraft for business
>(cost wise) and has it penciled out for you?
>

I used my aircraft primarily to attend various educational meetings. I
rented it to my company -- a professional corporation -- in which I was a
major (although not a majority) stockholder. The rent covered all of my
legitimately deductible expenses.



>6. One last question since you've been so darn good to hang in there
>this long :) ... top three tips for a new small business owner?
>

I don't know about the "top three tips" but, in view of the kinds of
questions you are posing here, I would advise you to not be reluctant to
seek out and pay for top-knotch legal and accounting advice.

My experiences in a PC may not be transferrable to an LLC.


Ron (EPM) (N5843Q, Mooney M20E) (CP, ASEL, ASES, IA)

[Ben Jackson]

In article <p7Blc.17706$IG1.665359@attbi_s04>,
William W. Plummer > wrote:
>
>You can check the rate for "use of personal airplane" on
>http://www.dtic.mil/perdiem . The mileage allowance cannot exceed the
>"customary commercial rate." It's hard to beat fares such as the $29 from
>Manchester,NH to Orlando, FL. You can't even taxi to the run-up area for
>$29.

How often do you make a flight between two points served by commercial
airlines? What if your personal flight enables you to be more efficient
or more effective? This is why you need a good accountant and not a
bunch of yahoos on usenet.

--
Ben Jackson
>
http://www.ben.com/

[Ron Rosenfeld]

On Tue, 04 May 2004 00:27:45 GMT, "William W. Plummer"
> wrote:

>Right. But I think IRS will track GSA. Any discrepancy will cause a red
>flag. Otherwise, you could write off all your airplance use at $100 per
>mile!

What makes you think that?

Corporations deduct expensive a/c flights all the time -- and I'd guess a
GIV costs more than $1/mile to run.


Ron (EPM) (N5843Q, Mooney M20E) (CP, ASEL, ASES, IA)

[Bob]

This is all good stuff, thanks folks. I definitely plan to see a tax
lawyer but just wanted to sort of get a big picture first. I'll also
do a lot more reading up on LLCs before the visit.

BOb

[Mike Rapoport]

If the employee is piloting the plane then his assets will be at risk.

Mike
MU-2

"Ron Rosenfeld" > wrote in message
...
> On 30 Apr 2004 15:39:24 -0700, (Bob) wrote:
>
> >For those of you using your plane for business...
> >
> >1. What is the tax deductable rate for hourly use of aircraft (e.g.
> >for cars it is $.36 a mile I believe)?
>
> There is no IRS approved rate for airplanes.
>
> >
> >2. Is it better to own my aircraft personally (to prevent the
> >aircraft being owned by the company in the event of a lawsuit) and
> >then have the business (LLC) "rent" from me personally for a certain
> >amount?
>
> You should really check with an attorney regarding this. But I'd imagine
> that if the company is sued, any of it's assets would be at risk. Assets
> of the company's employees should not be at risk, but that may depend on
> your precise relationship to the company. If you own the company, it may
> not make any difference -- but check with an attorney.
>
> >How much is this "rent" and is it based on actual costs or
> >future costs (overhaul, etc)?
>
> The rent is an agreement between you and the company, and it's based on
> whatever you and the company decide.
>
> >Taxwise I will have to declare the rent
> >as income if it is more than my operating costs, right?
>
> No. You have to declare all of the rent as income. You then get to
> declare any expenses incurred in generating that rent as expenses.
>
> >But the business gets to claim it as an expense, right?
>
> Probably -- but check with your tax attorney.
>
>
> >But how to convince the IRS of the actual and future costs of aircraft
ownership?
> >
>
> Receipts should document your actual costs. But why do you think the IRS
> is interested in your future costs?
>
>
> >3. Any good books, publications, or literature you can point me to
> >that address this specific subject?
>
> I'd check with AOPA, and your legal and tax consultants.
>
> >
> >4. I'm fairly new to owning my own business (LLC- I've had a very
> >small sole proprietorship in the past). Can any of you recommend good
> >info to read up on that is specific to LLCs particularily in the area
> >of sheltering personal property and how to get the most out of the LLC
> >tax wise?
> >
> >5. What are your experiences with using the aircraft for business
> >(cost wise) and has it penciled out for you?
> >
>
> I used my aircraft primarily to attend various educational meetings. I
> rented it to my company -- a professional corporation -- in which I was a
> major (although not a majority) stockholder. The rent covered all of my
> legitimately deductible expenses.
>
>
>
> >6. One last question since you've been so darn good to hang in there
> >this long :) ... top three tips for a new small business owner?
> >
>
> I don't know about the "top three tips" but, in view of the kinds of
> questions you are posing here, I would advise you to not be reluctant to
> seek out and pay for top-knotch legal and accounting advice.
>
> My experiences in a PC may not be transferrable to an LLC.
>
>
> Ron (EPM) (N5843Q, Mooney M20E) (CP, ASEL, ASES, IA)