Buying aircraft for business any good accountants here?

[manoflamancha]

Hi fellow Mooniacs,

I'm starting a business where I will visit clients in California and Nevada and a fast Mooney would greatly help me on business travel versus paying frequent commercial tickets. I'm looking at a Mooney 252 or Bravo for the mission due to the mountain terrain. How would I maximize the tax deductions for business usage in terms of purchase and acquisition costs and for fuel, hangar and MX fees? I plan to fly weekly from Sacramento to Vegas and stay at an apartment in both locations.

[Danb]

I'm a good accountant with a Bravo..there is an acct. firm in Fla. that specializes in airplanes if you have any specifics let me know, keep your personal use and business use separate the IRS looks strongly at adequate contemporaneous record keeping on this(That means enough good stuff records ,in a timely manner and purpose)  Also determine based on % of usage if you want to come up with a verifiable hourly rate if owned personally..eve if business owned you'll need the breakdown..

[Jerry 5TJ]

In California you can also avoid the sales tax on the price of the aircraft purchase IF you use the airplane for "Interstate Commerce" more than 50% of the time during the test interval, which can be six or twelve months.

At a sales tax rate of about 9% (depending on your county) that can be worthwhile. 

BUT you have to follow the Board of Equalization's requirements precisely from day zero (BEFORE you buy and take possession) to gain the exemption. 

 

 

[Hector]

Almost forgot about the "Board of Equalization"! Who the heck came up with that name for a tax agency? It's almost too funny, sounds like something out of George Orwell's Animal Farm

[Hank]

Simple, their goal is to equalize everyone's income. Easy to do, just find the lowest and take everything people earn above that.

Welcome to the People's Republic of Kalifornia.

[manoflamancha]

Thanks guys,

My business is mostly in Vegas and I plan to keep primary residence in Nevada with a small office in California. What about training costs to obtain ratings and maintain currency is that allowed as a business expense deduction? My business is non aviation but requires meeting clients in both states.

[BigTex]

Almost forgot about the "Board of Equalization"! Who the heck came up with that name for a tax agency? It's almost too funny, sounds like something out of George Orwell's Animal Farm

Actually, Karl Marx comes to mind...

[DonMuncy]

It is good to ask this group to find out their experiences, etc., but with your situation, you need the advice of a Federal tax expert, a California tax expert and an aviation tax expert, preferably all in one person, and preferably before you buy a plane. The tax implications in California (as I understand it) are quite important. Where you complete the sales transaction, and the first place you take it could be extremely important.

There was a tax guy who spoke at a MAPA Homecoming a few years ago, who fits your needs, I think. Maybe someone here remembers him. If no one else here remembers him, you might call MAPA and get someone to look back at their presenters to try to find him. No matter what he charges, I can just about guarantee it would be money well spent.

[LANCECASPER]

Actually, Karl Marx comes to mind...

He was the least funny of the Marx Brothers.

[Danb]

Mano. The firm I referred to is Advocate aviation accounting or a similar name Google it ..they have a team of lawyers and accountants who specialize in aircraft around the world from Mooneys to G-5s. Etc...

[1964-M20E]

One method I heard about but I’m not sure how it really works since I do not have my own business.

 

Essentially the plane is in an LLC and the primary business buys block time from the LLC for use of the plane to do just what you are wanting to do.  You could also buy time from the LLC for personal use.  The LLC made enough to break even and cover expenses the primary business was able to deduct the cost of the block time.  Yes this requires a second LLC but it appears to be workable.  You would want to check it out with your financial and legal advisors.

[Danb]

John I also have my plane in an LLC but not for business reasons....

[manoflamancha]

Ah that's clever idea to have an LLC just for the aircraft and lease it to my business for block time. Then I can also charter it to other pilots when not in use.

[helitim]

Ah that's clever idea to have an LLC just for the aircraft and lease it to my business for block time. Then I can also charter it to other pilots when not in use.

This point brings up an interesting option. Let's say you are a member of a flying club. You purchase a plane and put it on leaseback to your club. Could you as an owner then rent back your own plane and fully deduct the income received from yourself as an operational expense?

[Danb]

Helitim. Tes

[Danb]

Yes

[LANCECASPER]

Ah that's clever idea to have an LLC just for the aircraft and lease it to my business for block time. Then I can also charter it to other pilots when not in use.

I would definitely make sure you have an insurance policy that allows that before you charter it to other pilots.

[Piloto]

 I never email my 1040 form. I just hand fill it in cursive and mail it on an envelope on April 15. Besides I never get a refund, so why rush it.

 

José

[Wakeup]

Question? I moved to VA from TN 4 weeks ago. I have 3 rental properties in TN and would love to somehow write off my flights back to TN to "visit/maintenance " the property. Is that possible? I don't owe any money on the plane so I'm not sure what I would write off besides gas and hanger fees. Maybe I can buy a "letter" to help offset things. If anyone knows anything please let me know. Thanks. Troy

[Hank]

Back when I had an out of state rental house, trips back to check on it were deductible, as was realtor fees, repair bills, insurance, property tax and my favorite, Depreciation. Twenty seven and a half year straight line depreciation. Showed a loss every year . . .