Overview
Whether you use your business aircraft strictly for business activities or a combination of business and personal activities, there seems to be plenty of federal income tax issues to go around. Among the hottest of Hot Topics of late in the whole myriad of federal income tax issues is the subject of
personal use of the corporate-owned aircraft. This issue encompasses a broad spectrum of business aircraft operators because whether you are the chief executive of a public company or the sole shareholder of a successful start up, when you get to the point of being able to afford your own private jet, it seems everyone wants to go play.
This issue is followed closely by the question, will I be able to receive benefit for the
depreciation deduction on my aircraft. Aircraft, like automobiles, cell phones and computers, are listed property and therefore subject to specialized rules regarding depreciation.
The depreciation question is generally followed by a position that the corporate lawyer wants to own the aircraft in a special purpose entity set up specially to own the aircraft to shield you from liability in the event of an accident. Depending on other factors in the ownership and operating equation, this
entity structure can raise all sorts of special problems related to a variety of federal income tax issues and may lead to the creation of federal excise tax liability.
Somewhere in the discussion the question of aircraft leasing will come up. This is generally in the context of financing or sales and use tax planning. Additionally questions come up about placing the aircraft on charter. Can I make money or reduce my costs with charter? These questions and many others will lead you into the conceptually difficult arena of the
passive activity rules.
Our website, while not designed to provide tax advice, will hopefully provide at least a general understanding of the most common areas of federal income tax problems one might encounter as an owner or operator of business aircraft.
