March 1, 2014
By Kathy Dondzila
AOPA’s online publication, The Pilot’s Guide to Taxes, has recently been reviewed by author, pilot, attorney, and CPA Raymond Speciale for the 2013 tax year. This guide offers helpful information for aircraft owners who used their aircraft for business purposes in 2013 and may be eligible for income tax deductions.
The types of expenses members commonly look to deduct are the basic costs associated with aircraft operations, including maintenance, fuel, tie-down or hangar fees, landing fees, insurance, and depreciation. The guide discusses the interpretation of Internal Revenue Code (IRC) Section 162 which states that “[t]here shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business…” using relevant court decisions in several tax cases and rulings as examples of what was and what was not allowed to be deducted.
While relevant tax law for the 2013 tax year has not changed significantly from 2012, the update does include a couple of new tax cases that aid in understanding the laws. For instance, one case shows how good record-keeping for each business trip was useful in demonstrating how the use of the aircraft helped benefit the business by allowing for expanded customer contacts and flexibility in scheduling.
The guide includes a question-and-answer section that addresses many of the most common inquiries about income taxes. These include discussion of the different forms of business organization as they relate to taxes: C and S corporations, and LLCs; depreciation and methods of calculation; the number of years an aircraft can be depreciated; how depreciation may affect taxable income when the aircraft is sold; and Section 179 deductions that allow for an election to deduct or expense the cost of an aircraft. Many other questions are answered, as well.
Sales and Use Tax is also discussed and the section includes contact information for each state agency. In addition, a list of states that apply personal property tax is included.
AOPA strongly recommends that you work with a qualified tax professional when preparing your taxes. For more information, please call AOPA’s Pilot Information Center, 800/USA-AOPA (872-2672), Monday through Friday, 8:30 a.m. to 8:00 p.m. Eastern Time or email firstname.lastname@example.org.
Technical Communications Manager, Kathy Dondzila, joined AOPA in 1990 and is an instrument-rated private pilot.
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