Tax deductions?

[isaacpr7]

I was wondering if anyone knows the regulations on what can be tax deducted on aircraft ownership.  As we all know, military aviation budget has been affected due to government secuestration.  As an aviator in the Army, I was wondering if I could tax deduct flight training (out of my own pocket) in order to maintain IFR proficiency. Are there any mooniacs who are also tax lawyers and can shed some light on this subject?

[Danb]

I c/n give official answer only a perhaps I'm a cpa with masters in tax....In general if the expense is an ordinary business expense or is necessary for completion of your job it may be deductible, unfortunately based on whether it is a for profit venture ie. say a sole prop. Then it maybe a deduction on your sch. C. Otherwise it may be deductible as a miss. Expense if you itemize subject to a % of your income maybe... I would consult a tax advisor Cpa and present your situation, a lot of professionals may give you the advice at no cost due to your great duty...by the way thank you for your service

[John Pleisse]

Never use the word aircraft or airplane on a federal or state return....ever. Be honest. "M20 Utility vehicle" or "M20 Transportation Training Device" .....works best. I am not a CPA, but as a salaried employee, you can't take deductions. However, if you began an IFR Army proficiency sole proprietorship or small corp of some sort, you could 1099 yourself and offset expenses. I am sure there are many accountants, CPA's etc, who could chime in and give much more proper insight.

[fantom]

 Are there any mooniacs who are also tax lawyers and can shed some light on this subject?

 

You'll need their professional help for your audit...for a fee, of course.

[isaacpr7]

Never use the word aircraft or airplane on a federal or state return....ever. Be honest. "M20 Utility vehicle" or "M20 Transportation Training Device" .....works best. I am not a CPA, but as a salaried employee, you can't take deductions. However, if you began an IFR Army proficiency sole proprietorship or small corp of some sort, you could 1099 yourself and offset expenses. I am sure there are many accountants, CPA's etc, who could chime in and give much more proper insight.

Thank you so much. This helps a lot.

[isaacpr7]

I c/n give official answer only a perhaps I'm a cpa with masters in tax....In general if the expense is an ordinary business expense or is necessary for completion of your job it may be deductible, unfortunately based on whether it is a for profit venture ie. say a sole prop. Then it maybe a deduction on your sch. C. Otherwise it may be deductible as a miss. Expense if you itemize subject to a % of your income maybe... I would consult a tax advisor Cpa and present your situation, a lot of professionals may give you the advice at no cost due to your great duty...by the way thank you for your service

Thank you Danb. This really helps. I hate doing taxes because there are so many gray areas and when you call the IRS for help you can never get a straight answer. The standard answer seems to be, "it depends", lol.

[xftrplt]

Unless the Army REQUIRES you to maintain proficiency at your our expense--the likelihood of which my 20 years of military aviation and 20 years of Part 121 ops tells me is vanishingly small--the answer is no.

[N601RX]

Here is some good reading written by a CPA who specializes in aviation issues. He seems pretty sure ifr currency training would be deductible if your profession is a pilot. He makes the argument that if you are a professional pilot, the training is no different than a Doctor going to a weekend course to learn a new procedure or brush up on some specialized skill. You can also back up a few directories and read a few other articles he has wrote.

http://www.mkappcpa.com/www.pilotax.com/pdf/PilotEducation.pdf

[xftrplt]

The above advice from N601RX et al. is absolutely wrong as it pertains to military aviators and professional pilots employed by companies that provide the required training.

First (and this part is arguable), an Army aviator is not a professional pilot. He is a professional Army officer, whose MOS happens to include flying.

Second (and this is unarguable), the Army provides all the training you require to do your job. (Do guys driving Abrams need to go out and buy/rent bulldozers?)

Third, this is not the same as, say, a CFI who needs to maintain his training and/or knowledge base by attending seminars or flying at his own expense.

Fourth, it's your tax return. I surely won't be at the audit, however unlikely.

[N601RX]

You are free to get training outside of what your company provides and deduct it as long as the education maintains or improves skills needed in your present work and does not train you for a new career.

[Danb]

If you make all your decisions based on oh I may get audited, then never itemize...I handle Irs audits for a lining. Therefore I w/n listen to me..

[Danb]

I agree. Dan

[N601RX]

Some accountants are overly aggressive and some are too conservative in interpreting rules, much like IA's.  Here are a few things the original poster may be interest in looking into, It came directly from the IRS publication involving training expenses.  I also attached the flow chart they use to determine eligibility. You do not have to be self employed to deduct job related training.

 

 

 

You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests.

• The education is required by your employer or the law to keep your present salary, status, or job. The required education must serve a bona fide business purpose of your employer.

• The education maintains or improves skills needed in your present work.

 

Self-Employed Persons

If you are self-employed, report the cost of your qualifying work-related education on the appropriate form used to report your business income and expenses (generally Schedule C, C-EZ, or F). If your educational expenses include expenses for a car or truck, travel, or meals, report those expenses the same way you report other business expenses for those items. See the instructions for the form you file for information on how to complete it.

Employees

If you are an employee, you can deduct the cost of qualifying work-related education only if you:

1. Did not receive (and were not entitled to receive) any reimbursement from your employer,

2. Were reimbursed under a nonaccountable plan (amount is included in box 1 of Form W-2), or

3. Received reimbursement under an accountable plan, but the amount received was less than your expenses for which you claimed reimbursement.

If either (1) or (2) applies, you can deduct the total qualifying cost. If (3) applies, you can deduct only the qualifying costs that were more than your reimbursement.

 

[xftrplt]

And since when did the cost of owing a private plane qualify as work-related education for an Army officer?

I suppose the infantry should itemize the cost of .22 plinking ammo...and artillery types the cost of pumpkin-tossing trebuchets.

Itemizing per se is not the issue; it's what you itemize.

[N601RX]

I never suggested anywhere that you could deduct the cost of owning a plane.  My post simply said training is deductible if it relates to your job.  

[xftrplt]

The first sentence of the OP's OP posed that question.

(And another poor dead equine is beaten.)

[John Pleisse]

You both are arguing a moot point.  Write a mission statement, incorporate, try to make money, fail, deduct aviation expenses as "ordinary and necessary" and then be sure not to directly call it that (but still be honest) on your return. Repeat 2 years later. A great part time diversion for an Army pilot.

[isaacpr7]

Unless the Army REQUIRES you to maintain proficiency at your our expense--the likelihood of which my 20 years of military aviation and 20 years of Part 121 ops tells me is vanishingly small--the answer is no.

I know there are many gray areas to this topic and this is why I am conducting this research. One reason that leads me to believe that it can be done is due to the fact that soldiers tax deduct many things that the Army does not require them to buy out of pocket all the time. Soldiers tax deduct weapons and amunition purchased out of pocket for "marksmanship training" so they maintain proficiency. I also know many soldiers who tax deduct their cell phone bill because they are used on a day to day purposes for Army operations and are also listed on alert rosters. The list goes on and on. I am sure civilians such as cops also tax deduct expenses for work related expenses. Officers in the Army do not get uniform allowance and also have to be purchased out of pocket.

[isaacpr7]

And since when did the cost of owing a private plane qualify as work-related education for an Army officer?

I suppose the infantry should itemize the cost of .22 plinking ammo...and artillery types the cost of pumpkin-tossing trebuchets.

Itemizing per se is not the issue; it's what you itemize.

You have some points that may be valid; however, I am looking for a reference in black and white which is regulatory in nature and fairly easy to interpret. I am doing this research only because I would not want to violate any tax laws. At the end of the day, it will be the black and white paper that I would be judged by if I was audited.  My point is that if the military service does not have enough money for now so that each and every individual pilot can maintain proficiency in required career skills, why can't I take the initiative to utilize personal funds to ensure that I am proficient at my job. At the end of the day, if I fail to maintain proficiency during anual checkrides and several no notice checkrides throughout the year, I would go before a flight evaluation board and loose my wings (job as well and would be unable to work as a pilot as a civilian because my records would show that my wings were stripped).

[DonMuncy]

I am an attorney, but not a tax attorney. I do know enough about tax law to tell you that, unfortunately, you are extremely unlikely to find a definitive answer to your question. Unless you could find a tax court appeals case with exactly the same facts as you have (extremely unlikely), you are going to be stuck with either your, or some expert's opinion of what is legal. As some one has already pointed out, there are conservative and aggressive CPAs an tax attorneys. I would bet a lot of money you could find many who would say you can write these off, and many who would say you can't. Your best bet is to take the answers you are getting here and pick the side that you feel comfortable with.

[isaacpr7]

I am an attorney, but not a tax attorney. I do know enough about tax law to tell you that, unfortunately, you are extremely unlikely to find a definitive answer to your question. Unless you could find a tax court appeals case with exactly the same facts as you have (extremely unlikely), you are going to be stuck with either your, or some expert's opinion of what is legal. As some one has already pointed out, there are conservative and aggressive CPAs an tax attorneys. I would bet a lot of money you could find many who would say you can write these off, and many who would say you can't. Your best bet is to take the answers you are getting here and pick the side that you feel comfortable with.

Thank you Don. This confirms some of my thoughts are on right track. What's funny is that not even the IRS can give a straight answer. When I spoke to them, I was given a gray explanation on pretty much how the wind has to blow and the sun has to be at a certain angle in order to answer my question.

[carusoam]

Ok....

Say you are willing to take the risk that you are right.....

You file and take the deduction.

(1) you are right and everything goes away as planned.

(2) you are wrong, they let you know, and you have to pay what you owe + a percentage for their effort.

I'm not a tax expert, but I have been audited...., remember to get the payments and IRAs in on time!!!

Like Mooney training, It helps to hire a professional when you live on the edge.

I was young once,

-a-

[N601RX]

The link I posted on the 1st page contains a article written by a CPA specializing in aviation matters. He mentions supporting case law in a couple of his statements. You may want to see if you can get copies of the cases and see how similiar they are to your situation. He doesn't go into detail, but on the surface they seem very similiar to what you are asking about.

[xftrplt]

:-)

( just love messing with you AF guys!)

On that subject we're generally soft targets. To wit:

Signing in at an F-4 squadron in Madrid, I got "volunteered" for liason duty for a Reforger Exercise. Driving a BMW, my GIB and I reported to the Army campsite somewhere near the Fulga Gap. The Army appeared happy as clams, male-bonding and enjoying the great outdoors in the comfort of their Diesel-fired hot water heaters, air mattresses, etc. We took a quick look around and, with nary an O-club in sight, asked what time they needed us the next day and high-tailed it to the nearest gasthaus. For the next five days we "roughed it" commuting. I recall our liasonees shaking their heads and muttering what, in retrospect, I'm sure were expressions of inter-service endearment.

[isaacpr7]

Oh darn, I forgot to deduct my two tri-fold knee-boards from Wings, two kneeboard timers, my second all metal E6B, my lip-light and custom counter-weights bag, cost of a personal helmet bag, D-ring and two Aeroscout patches for my personalized helmet bag with airborne and air assault badges sown on, cost of sewing, three packs of color-coded markers for highlighting every thing on the map and in chapters five and nine of the -10s and five thousand yards of laminate for laminating everything I carried ... when filing for the 1990 tax year. We got a little busy after Sadam attacked Kuwait! Is it too late now to file an amended return? :-)

LOL! I think you might be just a bit late for that Dave. No point in keeping receipts after five years, right? These days (hopefully not for long) we operate more like most school teachers, buying supplies out of pocket to be able to do our jobs but we do it because we love our job (at least I do). Tax laws suggest that we could deduct these expenses, so why not? It's not like soldiers are rich to begin with