Ready for Takeoff
Taking flight: Tax Aspects of Aircraft Ownership
by Victor C. Anvick, MST, EA, Atis Group LLC, copyright March 2007
prevWith a seat on a new VLJ aircraft expected to cost about the same as a fully refundable coach ticket--without the problems of long security lines, lost baggage, missed connections and the like--CPAs will find business aircraft ownership can be a cost-effective alternative for clients and employers. CPAs should track any additional income made possible by using a private aircraft. It's not uncommon for additional income, the value of time savings or increase in portfolio value to exceed the acquisition cost of an aircraft in two to three years.
Business Aircraft: Facts and Figures
- About 15,000 business aircraft are in operation in the United States with just 3% of them flown by Fortune 500 companies.
- Some 86% of business aviation flyers are midlevel professional or technical staffers.
- Companies operating business aircraft earn 140% more in cumulative shareholder returns than companies without business aircraft.
Source: National Business Aviation Association, Washington, D.C., www.nbaa.org.
Practical Tips
- Don't buy more or less airplane than the company needs. Look for a plane that will satisfy 80% to 90% of travel requirements for the next three years.
- Ask the aircraft manufacturer to "unbundle" the sales price to help uncover items the company can expense vs. capitalize.
- Carefully research all applicable taxes. Don't try to register the aircraft in a nontax state unless you have an office and intend to base the plane there.
Victor C. Anvick, MST, EA, is an aircraft owner and pilot who specializes in aviation taxation in Action, Calif. To contact Victor, or for more tax case studies see: Atis Group, LLC.
This article is included in Gulfstream Contract Pilot Services' resource library strictly for your convenience. The information in this article is provided without guarantee or warranty, and is subject to change without notice. The information is the opinion of the writer, and may not reflect the opinion(s) of Gulfstream Contract Pilot Services or it's associates. The information should not be relied upon as advice to help you with your specific issue. We recommend that you discuss the specific facts of your situation with a qualified professional before making any personal or business decisions.
