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Tax questions for company RV

- Poindexter -

Well Known Member
Thought I’d reach out to the group with some tax and general questions before I turn it over to my CPA.

Background:
I own an (electrical/solar contractor) California S-Corp company that does work throughout the state, so am constantly traveling for work. Many of the places are unique (ie - Susanville, Barstow, Delano, etc) where the RV is perfect due to speed and access. I fly 99% of the time by myself, and all the flying is for business purposes. I’m looking at building an RV-7a or 14a, either a QB or taking on an unfinished project. I would be the sole builder. 1st build, but have helped others.

Questions:
(1) Should the kits be purchased in my name and then transferred to the company after airworthiness certificate (Registration) or can they all be purchased under the company?

(2) I realize that this may take years, unless I am fortunate to pick up an advanced project. How does purchasing kits along the way effect year-end taxes before it’s airworthiness certification over a period of a couple years?

(3) Or, is there a better approach? I would prefer to have the costs run through the company, but have my name on the repairman certificate (unless it can be under the company name).

Sure, it would be easier to just buy a flying RV, but I really want to build one and enjoy the build aspect of projects. :)

Thank you
Paul Brunner
ws2158 at gmail dot com
415, eight, one, nine, 0668
 
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2. CA sales/use tax is due in the year you spend the money. Property taxes start the calendar year following the year you get the airworthiness certificate.
3. Repairman certificate cannot be in the company name. One, and only one, individual.
1. Talk to a lawyer. A transfer may invoke another sales tax.
For an aviation lawyer: EAB cannot be used ‘for compensation or hire’. Make sure you steer clear of any commercial issues.
 
Whoever insures your company may exclude the use of it in the policy. Check this out too.
 
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If it were me, and I was the sole owner of the company, I would purchase the kit and all the other parts with funds from the company, and defer how to register it later. For the aircraft to be certified as experimental amature built it must be built by a person.
Under the provisions of FAR 21.191(g), an experimental amateur built aircraft is defined as an aircraft of which the major portion has been fabricated and assembled by a person(s) who undertook the construction project solely for their own education or recreation.
 
Hmm... If you consider the building as for educational purposes, could it be considered part of your company's ongoing personal development program? Then all of your tools would be "school supplies..." :)
 
Can of worms

Having been a pilot and owner for 29 year and an ear for a good protective CPA. I have asked and been warned to not get my airplane ownership anywhere my company books. I have been told may a times that it is a real good way to get audited. And my company has been many a time. They are not nice people and look for anything to nail you to the cross.
I have had to pay sales tax twice on multiple items because the paper trail wasn't perfectly clear. As you can guess I am real gun-shy with government processes.
Good luck getting the tax deductions.
I personally would buy, build and or own the aircraft outright and kiss the depreciation good by.
Art
 
Appreciate the input. Right now, the company pays for plane rentals, at the billed rate (rental cost of the trip).

Could do Dan’s method, but not sure if there is a plane mileage rate, like cars.
And, not sure if kit costs are deductible along the way since it is not a complete (registered) plane.
 
Hmm... If you consider the building as for educational purposes, could it be considered part of your company's ongoing personal development program? Then all of your tools would be "school supplies..." :)

Yes, with hangar and tool deductions. But, not for educational. Many of the tools for building an RV are also used for our business (compressor, riveting, and saw, etc). And, the hangar could store these tools, since they come and go with our projects.
 
Appreciate the input. Right now, the company pays for plane rentals, at the billed rate (rental cost of the trip).

Could do Dan’s method, but not sure if there is a plane mileage rate, like cars.
And, not sure if kit costs are deductible along the way since it is not a complete (registered) plane.

IANAL, but I can read:

§ 91.319 Aircraft having experimental certificates: Operating limitations.
(a) No person may operate an aircraft that has an experimental certificate -
(1) For other than the purpose for which the certificate was issued; or
(2) Carrying persons or property for compensation or hire.​
...
(f) No person may lease an aircraft that is issued an experimental certificate under § 21.191(i) of this chapter, except in accordance with paragraph (e)(1) of this section.

The FAA has gone so far as to say that even a flight in an EAB which was given as part of a charitable event (auction, give-away, whatever) *where an external entity like the charity* is the one who gets a donation (not the pilot, not the owner of the plane) is a commercial use, so I'd be mighty careful about trying to play fast and loose with the rules on getting compensated for using your RV.
 
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My opinion, and one that appears to be shared by at least one law firm, is that as long as the travel is incidental to the business purpose you're ok expensing the travel as far as the FAA/op-lims because the travel itself is not for compensation or hire. That is the business purpose of the trip doesn't change whether you drive or fly, you are only flying for your convenience. This sounds like the OPs situation.

If it were me I'd likely just build and own the plane personally and reimburse myself at the standard mileage rate; easy and "low risk". GSA does have a standard mileage rate for airplanes, $1.27/ statute mile in 2020.
 
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My opinion, and one that appears to be shared by at least one law firm, is that as long as the travel is incidental to the business purpose you're ok expensing the travel as far as the FAA/op-lims because the travel itself is not for compensation or hire. That is the business purpose of the trip doesn't change whether you drive or fly, you are only flying for your convenience. This sounds like the OPs situation.

If it were me I'd likely just build and own the plane personally and reimburse myself at the standard mileage rate; easy and "low risk". GSA does have a standard mileage rate for airplanes, $1.27/ statute mile in 2020.

That link seems to be more about whether you can *deduct* the expenses from your taxes, not about whether you can get reimbursed for the expenses by a company.

Best advice here? Don't listen to internet forum advice. Talk to an aviation attorney with experience in experimentals. The downside to messing this up could be suspension or revocation of your license.
 
If you were flying into a head wind and your "effective" trip distance was 30% higher, are you limited to the published city-to-city distance figures?

:D
 
Maximizing reimbursements

You should search for the routes with the greatest headwinds to maximize your reimbursement amounts.:D
 
Thanks everyone. We’ll be meeting with our CPA to review year-end, and have the discussion. I’ll have him review the “personally own it and get reimbursed” vs “company owns it.”

We’ve done a good job of avoiding all IRS issues along the way, so expect the same. :)
 
Thanks everyone. We’ll be meeting with our CPA to review year-end, and have the discussion. I’ll have him review the “personally own it and get reimbursed” vs “company owns it.”

We’ve done a good job of avoiding all IRS issues along the way, so expect the same. :)

And your CPA knows the rules for Experimental Aircraft? Remember, the IRS doesn't know or care about FAA regulations, and vice-versa, so what's okay with the IRS might cost you your license with the FAA.

Again...best advice is to *talk to an aviation attorney who knows experimental aviation*.
 
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