Aviation Tax Information

Aviation Tax Information for Business Aircraft Owners, Operators and Aviation Professionals

Aircraft ownership and operation can involve a wide range of federal, state and aviation-specific tax considerations. Ownership structure, business and personal use, SIFL, cost disallowance, state taxes, aircraft sales and other tax rules can all affect the tax treatment of a business aircraft.

Aviation CPAs has specialized in aviation taxation and financial services for more than four decades. The information below provides an overview of a range of federal and state tax issues affecting business aircraft.

Explore the topics below to learn more about aviation tax considerations and reporting requirements.

I. Income Taxes for Aircraft Used in Business

The tax treatment of a business aircraft can depend on its ownership structure, how the aircraft is used, and the nature of the business activities associated with the aircraft.

Establishing the Groundwork

• What Constitutes Business Use of an Aircraft?
• Business vs. Personal Use
• Aircraft Expenses and Tax Deductions
• FAA, DOT and IRS Considerations
• Cash vs. Accrual Accounting
• Business Records and Documentation
• The Importance of Consistent Business Records
• When to Involve an Aviation Attorney

Selecting the Tax Ownership Structure

• Aircraft Ownership Structures
• Single-Asset and Special-Purpose Companies
• LLC, S-Corporation and Individual Ownership
• Flight-Department Companies
• Aircraft Leasing Structures
• Leasing to Charter Operators and Flight Schools
• Ownership Structure and Tax Considerations

Learn More About Aircraft Ownership Structure →

Tax Regulations and Limitations

• Passive Activity Loss Limitations
• At-Risk Limitations
• Hobby Loss Rules
• S-Corporation Shareholder Basis
• Loss Carryforwards and Carrybacks
• Business and Investment Use
• Tax Documentation and Substantiation

Non-Business Use of Business Aircraft

• Personal Use of Business Aircraft
• Business and Personal Use Allocation
• Employee and Owner Use
• Aircraft Use by Family Members and Guests
• Tax Treatment of Non-Business Use

State Aircraft Taxes

• State Sales Tax
• State Use Tax
• Personal Property Tax
• State Tax Exemptions
• Aircraft Delivery and Sourcing Considerations
• Interstate Aircraft Transactions
• Aircraft Purchased or Based in Another State

Learn More About State Sales & Use Taxes →

Aircraft Depreciation

• Tax Depreciation
• MACRS Depreciation
• Alternative Depreciation System (ADS)
• Bonus Depreciation
• Section 179
• Aircraft as Listed Property
• Qualified Business Use
• Business-Use Requirements for Aircraft
• First-Year Depreciation
• Depreciation of Improvements and Upgrades
• Short Tax Years
• Form 4562 Reporting
• Depreciation Recapture

What Happens When I Sell the Aircraft?

• Tax Treatment of an Aircraft Sale
• Gain or Loss on Sale
• Depreciation Recapture
• Aircraft Trade-Ins
• Section 1031 Exchanges
• Form 4797 Reporting

II. Personal Use of Company Aircraft

Personal use of a company aircraft can create additional income, payroll, reporting and tax considerations for employees, owners and their companies.

Imputing Income from Personal Use Flights

• Definition of a Personal Use Flight
• Employer-Provided Aircraft
• Applicable Aircraft and Operating Structures
• Who Is Taxed?
• SIFL vs. Fair Market Value
• Control and Non-Control Employees
• Passenger Classification
• 50% Seating Capacity Considerations
• Spousal and Family Travel
• Mixed-Use Flights
• International Flights
• Bona Fide Security Plans
• Imputed Income Reporting

Calculating a SIFL Personal Use Flight

• SIFL Valuation
• Point-to-Point Flight Considerations
• Routing Information
• Passenger and Flight-Purpose Classification
• Aircraft Weight and Applicable Aircraft Multiple
• SIFL Mileage
• Terminal Charges
• Personal Use Flight Reporting

Calculating Fair Market Value Personal Use

• Fair Market Charter Value
• Charter Rate Considerations
• Routing Information
• Passenger and Flight-Purpose Classification
• Employee Control of the Aircraft
• FMV Valuation and Taxable Benefit

Reporting Imputed Income

• Reporting Imputed Income to Employees
• W-2 Reporting
• Payroll and Withholding Considerations
• Reporting for Partners and Other Non-Employee Users
• Employer Reporting Requirements

Aircraft Cost Disallowance & Entertainment Use

• Entertainment Use of Business Aircraft
• Specified Individuals
• Aircraft Costs Subject to Disallowance
• Business vs. Entertainment Flights
• Mixed-Use Flights
• Deadhead Flights
• Cost Disallowance Considerations
• Recordkeeping and Documentation
• Bona Fide Security Plans
• Public Company Considerations

SEC Reporting for Corporate Aircraft

• Corporate Aircraft Disclosure Requirements
• Executive Aircraft Use
• Personal Use Reporting
• Incremental Cost Considerations
• Executive Compensation Reporting

III. Aviation Tax Services

Aviation CPAs provides a range of tax, accounting, consulting and financial services specifically focused on business aircraft. Our services include:

• Aircraft Tax Returns
• Aircraft Ownership Structure
• State Sales & Use Taxes
• Aircraft Tax Audits & Audit Defense
• Aircraft Purchase & Sale Structuring
• Aircraft Depreciation
• Personal Use of Company Aircraft
• Aviation Financial Management
• Other Aviation Tax & Consulting Services

Explore Our Aviation Tax Services →

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Have Questions About Your Aircraft Tax Situation?

The tax treatment of a business aircraft can involve federal and state tax regulations, ownership structure, aircraft use, flight activity and other factors. Aviation CPAs works with aircraft owners, operators and their advisors to address the tax and financial issues associated with business aircraft.

Contact Aviation CPAs to discuss your aircraft tax needs.