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Tax write offs, using your RV

Sig600

Well Known Member
I know a bunch of guys on here have started LLC's or some other form of business in order to benefit using their RV as a tax write off. Can someone here versed in the process elaborate on the details of setting this up?

Looking at whether it's possible to roll rental properties and the plane into one LLC to benefit from tax write offs (legally).
 
if you use it for business purposes/travel, yes, you have to document the time you spend using for business, the purpose of each trip along with any associated expenses/receipts

then at end of year, your CPA will total all this up, and total the personal use up, come up with a ratio, then depreciate the total value of your RV against that ratio

so, it is in your best interest to keep lots of documentation, AND, the overlooked part, your CPA is going to want a lot of documentation to assess the value of your RV, the second part is usually harder than the first part, especially if you bought it built
 
Then there is the whole FAA slippery slope of whether or not the pilot has to be commercially rated. FAA published some position papers a few years ago stating that deducting fuel for YE events on your taxes was considered compensation. Then there is the whole debate about using an experimental for commercial purposes.

My intent is not to start a debate or dialogue on how to skirt these issues. I suspect that most of us fall into the category in which the deductions aren't worth the hassle or exposure that they may bring if you take them.
 
Just for what it's worth, I have known several people who went down this investigative path to extremes.

I know of none who found that it was practical.
 
Hire a competent CPA and do not take literal any advice you find on forums, is my first piece of advice. Now having said to ignore me, consider the below as you will-

Secondly, the whole FAA stance on commercial vs private is just within FAA's jurisdiction, that has nothing to do with the IRS tax code- completely separate. You can violate the FAA all you want and there is absolutely no way that it will impact your tax situation.

Case in point, I offer the simple predicament of failing to be airworthy/current with your airframe or your certificate- can you use that to avoid property taxes on the airplane? If a flight school loses their 141 accreditation, are they now exempt from taxes? No.

As for your fuel and maintenance expenses, none of that matters. You need milage, you are allowed to use the milage reimbursement method or fuel/expenses, whichever is greater. As I stated earlier, you need hard documentation of who/what you were doing for that flight, record of the flight (file IFR everywhere you go, for example, though FBO receipts and dates on them work just as well)

http://www.gsa.gov/portal/content/1...-radio&utm_term=mileage&utm_campaign=shortcut

$1.33 a mile, going ~200mph....yeah, i disagree with those above, it is absolutely worth it.
 
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Sooo, your first piece of advice is to disregard your advice? ;)

dudewhat.jpg
 
I agree with Brian's general comments but he chose a poor example. As my plane neared completion I registered and got an N number. Tax assessor came calling. I pointed out that with no A/W certficate I owned a bunch of airplane parts, not an airplane. He agreed. (Of course, once I got the AW, tax bill came).
 
In forty years of general aviation flying, I have heard lots and lots of folks talk about writing off their flying. So has the IRS, which is why I think that they have a computer program that checks for the word "airplane" in a tax return and automatically schedules an audit... and that is sort of what our accountant says.

However, keeping a careful log of travel done for business purposes and writing off the allowable per mile expenses seems to be within my accountant's comfort zone. But it REALLY has to be work related.

(And my argument that and aeronautical engineer building an airplane for "Educational purposes" should be tax deductible? Yeah, he laughed at that one....)

Get a good accountant who is willing to work with you and follow his/her advice.
 
http://www.gsa.gov/portal/content/1...-radio&utm_term=mileage&utm_campaign=shortcut

$1.33 a mile, going ~200mph....yeah, i disagree with those above, it is absolutely worth it.

That's the rate the government will pay you, if you're a government employee traveling on government business or TDY. As near as i can tell the standard mileage deduction rate is $1.24 per mile, but the only place I found that was a 2009-ish publication. Still not too shabby, if it's true.
 
In forty years of general aviation flying, I have heard lots and lots of folks talk about writing off their flying. So has the IRS, which is why I think that they have a computer program that checks for the word "airplane" in a tax return and automatically schedules an audit... and that is sort of what our accountant says. <snip>

Exactly what my accountant has been telling me for 40+ years. The other word that the IRS computer looks for is "sailboat" when combined with "charter." These things may be turned into deductions, but throw in one good audit and you will never break even.

Of course if you are an aviation writer... :rolleyes:

John Clark ATP, CFI
FAAST Team Representative
EAA Flight Advisor
RV8 N18U "Sunshine"
KSBA
 
I'm no tax expert so consult your accountant, but I have owned rental properties. Any travel, regardless of what it is, is tax deductible if for business purposes which in your case is to get to and from the rental properties. Just figure out an hourly rate for your plane and write that off, or use the mileage deduction. If you claim the plane as a business asset and start taking depreciation it will come back to haunt you when you sell it. Perhaps that only makes sense to do if that will be the main purpose of owning the plane. If my car is any gauge, being in outside sales I have a choice of claiming my car as an asset, taking depreciation on it, etc or just claiming actual mileage. It is easier and about the same end result just to claim the business mileage.
 
In forty years of general aviation flying, I have heard lots and lots of folks talk about writing off their flying. So has the IRS, which is why I think that they have a computer program that checks for the word "airplane" in a tax return and automatically schedules an audit... and that is sort of what our accountant says.

I have had the word "airplane" in my tax return for the past eight years and have never been audited. For 2012 I have over $24,000 in aviation related deductions. As long as the IRS is willing to grant me a $1.33/mile deduction I will take it all the way to the bank and I would be comfortable with an audit to justify every penny. The IRS does not differentiate between business jet travel and RV travel. I take the same $1.33 deduction as Donald Trump takes and I don't lose my hair worrying about an audit.

Our last air show in 2012 was in Acapulco. I took a $4705 deduction for the 3538 mile round trip. I only spent a bit over $700 for gas. Even if I factor in the total expenses ($78.43/hour) the trip cost me just $1500.

I have no problem justifying the business nature of my flying. As long as the IRS sees your flying as a business expense the tax advantages are generous.
 
I'm 100% with ya' Smokey - the mileage deduction is the mileage deduction, and yes (as John points out), being an aviation writer makes the "big shows" business expenses for me - just like for you guys on the "Team". On the tax return, it is simply "Private Air".
 
I agree with Brian's general comments but he chose a poor example. As my plane neared completion I registered and got an N number. Tax assessor came calling. I pointed out that with no A/W certficate I owned a bunch of airplane parts, not an airplane. He agreed. (Of course, once I got the AW, tax bill came).

again, perhaps i could have made some better examples, but this has nothing to do with the FAA- this is the IRS's definition of an aircraft (they have one too)

it is my opinion that if you are afraid of an audit or any questioning on your reason for deductions, then you probably shouldn't be doing them in the first place. I'll gladly open my books to anyone who questions my use of my airplane for the furtherance of business. I do not think this is something we should cower behind or try to hide from the public. I think it is an excellent selling point for the RV platform versus say, a Cirrus or something that is more typically associated with business use ( on an operating cost basis )
 
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That's the rate the government will pay you, if you're a government employee traveling on government business or TDY. As near as i can tell the standard mileage deduction rate is $1.24 per mile, but the only place I found that was a 2009-ish publication. Still not too shabby, if it's true.

this is false, I have verified this with several sources including two CPA's and an aviation attorney- the IRS recognizes the GSA's published values unless they have a more specific one available (in the case of automobiles they do as shown below)

--


Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
56.5 cents per mile for business miles driven.
24 cents per mile driven for medical or moving purposes.
14 cents per mile driven in service of charitable organizations.
The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.
 
In my case getting reimbursed at $1.33/mile is just not an option. My company lets me fly my RV on business travel if I can do it at no additional cost to the company. The trip has to either cost the same or less than going by commercial travel. On a case-by-case basis I can use it when direct travel costs are higher if I am going to remote locations and can show a significant travel time reduction, which I often do.

HOWEVER on a long trip the airlines are probably the cheaper alternative even when all additional costs like parking are included. For instance, last fall I took my RV from Fort Worth, TX to Yuma, AZ on business. The distance is 996 statute miles and if reimbursed at $1.33/sm the company would have had to pay me $1324.68. Round trip airfare would have been about $650 so the reimbursement would have cost my company about $674 more each way.

I ended up having the company pay the fuel for the trip. I don't remember the exact amounts but I flew about 6 hours each way so 12 hours at about 8 gph average (yes I fly LOP) is about 100 gallons and would cost about $600, which is roughly equal to the airfare.

While I did not get reimbursed for all the allocated costs of the plane (hanger, maintenance, insurance etc.) I was able to get the incremental cost (fuel) for about 12 hours of very interesting flight time covered while avoiding all the hassles of commercial air travel. To me it is a good trade.
 
if you don't get reimbursed, then use it as a personal deduction, it's one or the other but never both

a lot of companies will not even acknowledge the use of personal aircraft for liability reasons, some forbid it (again, this doesn't affect your ability to use the IRS portion of traveling, just the legalities of a post-incident arbitration situation)
 
So, if I own my own company and use my personal AC to get from one point to another for strictly business, can my company pay me 1.33 per mile as a travel expence?

I do a lot of jobs on the other side of the lakes and it is a lot shorter and quicker fly than drive. Can even save me days!
 
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