GaryChatelain
Member
I know it's a risky situation, but has anyone had success writing off their RV on their income taxes? I would love to know how this can be done. Thanks in advance.
Van's Air Force
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RV as a tax write off
- Thread starter GaryChatelain
- Start date
LifeofReiley
Well Known Member
Are you...
on a suicide mission??? You will have every taxing authority after you just after your registration... state etc... Move on... even business use is too risky. All I can say is document, document, document if you try and go this route.
on a suicide mission??? You will have every taxing authority after you just after your registration... state etc... Move on... even business use is too risky. All I can say is document, document, document if you try and go this route.
And there is the answer.
LifeofReiley
Well Known Member
Be very careful... Do your research and get help putting your plan together! It will be your job to provide absolute proof.
Talk to your accountant (of course) but I can tell you that I occasionally use my plane for business. I own it personally and I file an expense report with my business (which I also own) for the cost of operating the plane. In round numbers, I charge the business $100 per hour for the plane. It's legit and I don't expect I would ever have any problems if audited.
Do note that I don't try to take the whole plane as a tax exemption. The majority of use is personal so this works well for me.
-- Art Z.
Do note that I don't try to take the whole plane as a tax exemption. The majority of use is personal so this works well for me.
-- Art Z.
This has been ask several times......
the answer is the same. I can think of several ways an RV & associated expenses could be written off.
1. If you use your RV as a "Test Bed" for products you develop & sell it becomes as any other business asset. Can't be a sham, but several out there are doing this or should be. ie. Eggenfeller, Van's, Avery tools, even little manufacturers. The airplane becomes a necessary development tool to the business. I could even easily make a case for Doug Reeves to deduct his RV. It is necessary to their business.
2. Promotion of an item or entity. If Red Bull bought an RV, painted it up in "Red Bull" paint schemes and logos and operated it at public events for promotion, don't you think they would deduct the airplane & related cost? Now note they would have to own the airplane, because you can't use experimentals for commercial hire, but in this case no fee is changing hands for promotion, goodwill or advertising. They are simply using their business asset to promote their product.
3. Business travel in your owned business. Document well, but don't be afraid. Keep current records. Each year allocate related expense in portion to business time/ total time.
Giving time to thought, I could probably think of more examples which would be legitimate. Main thing is to follow the law, no shams, but it is lawfully done. Consult a good tax CPA or tax lawyer, one that is not afraid of the large shadow of the IRS. If you get audited, oh well, it's not the end of the world, argue your case win or lose and go on.
My advice is worth what you paid for it. I didn't stay at a "Holiday Inn" last night, but I am a retired CPA.
the answer is the same. I can think of several ways an RV & associated expenses could be written off.
1. If you use your RV as a "Test Bed" for products you develop & sell it becomes as any other business asset. Can't be a sham, but several out there are doing this or should be. ie. Eggenfeller, Van's, Avery tools, even little manufacturers. The airplane becomes a necessary development tool to the business. I could even easily make a case for Doug Reeves to deduct his RV. It is necessary to their business.
2. Promotion of an item or entity. If Red Bull bought an RV, painted it up in "Red Bull" paint schemes and logos and operated it at public events for promotion, don't you think they would deduct the airplane & related cost? Now note they would have to own the airplane, because you can't use experimentals for commercial hire, but in this case no fee is changing hands for promotion, goodwill or advertising. They are simply using their business asset to promote their product.
3. Business travel in your owned business. Document well, but don't be afraid. Keep current records. Each year allocate related expense in portion to business time/ total time.
Giving time to thought, I could probably think of more examples which would be legitimate. Main thing is to follow the law, no shams, but it is lawfully done. Consult a good tax CPA or tax lawyer, one that is not afraid of the large shadow of the IRS. If you get audited, oh well, it's not the end of the world, argue your case win or lose and go on.
My advice is worth what you paid for it. I didn't stay at a "Holiday Inn" last night, but I am a retired CPA.
LifeofReiley
Well Known Member
Well...
You can have a CPA, TAX attorney to boot and win in a suit in Federal court and STILL be force to pay or spend MORE money to fight. Yes, IF you have a true well documented fire safe business and files... Go for it. As stated win or loose and move on.
You can have a CPA, TAX attorney to boot and win in a suit in Federal court and STILL be force to pay or spend MORE money to fight. Yes, IF you have a true well documented fire safe business and files... Go for it. As stated win or loose and move on.
You can have a CPA, TAX attorney to boot and win in a suit in Federal court and STILL be force to pay or spend MORE money to fight. Yes, IF you have a true well documented fire safe business and files... Go for it. As stated win or loose and move on.
This is true, but just remember whatever you spend in your defense is "Tax Deductible". It always amazes me that some tax payers restate the tax law to a more generous standard to the government's advantage just to avoid possible confrontation. It follows the logic of "1. How much did you make?, 2. Send this amount as tax due."
Just follow the law, act in good faith. If a person is that concerned, he can go to the IRS, explain the situation and get a written opinion concerning the matter before a deduction is ever taken.
LifeofReiley
Well Known Member
Yeah...
at one time I really thought the same until my good friend, a FED agent long past dealing with tax cases (now into money laundering cases) spelled it out for me. Have fun out there and protect your assssets!
And yes I have a CPA and TAX attorney.
at one time I really thought the same until my good friend, a FED agent long past dealing with tax cases (now into money laundering cases) spelled it out for me. Have fun out there and protect your assssets!
And yes I have a CPA and TAX attorney.
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[email protected]
Well Known Member
LifeofReiley
Well Known Member
I talked to a guy who bought a lakeside cabin in Alaska. He leases it out 6 months a year and lives in it the other 6 months. He told me he is able to write off his travel expense to and from Alaska each year because it is considered a business expense for him to go there and check on his income property. Now I have no idea if this is acceptable under tax law, but that is what he does. If you want to take it a step further, could you build (or buy) a plane in order to fly to your "business income" destinations and write off the cost? Again, I would not venture down this road unless it were clearly legal.
You can claim anything and as long as it does not create a red flag to trigger an audit, it may clear. The old saying "only a fool listens to a fool's advice" applies here. Don't be cheap and cut corners. Contact a CPA to determine if your situation will allow the deductions and if the methods of documenting the deductions will actually produce a net savings for you after the expenses of claiming the deduction(CPA costs, book keeping time, etc.). Some expenses have more than one method of documenting or claiming the deductions(claiming vehicle mileage vs claiming actual vehicle operating expenditures), but only a professional can provide accurate advice. If you want a rocket launched, you call NASA, if you are sick, you call a physician. If you want to stay out of an audit, call a CPA.
mikegraycmg
Well Known Member
ask a pro
There are people who are paid to know the answers to these questions. Pay a small fee to get an answer in writing from a tax lawyer or tax accountant. That doesn't mean they are infallible, but you should be able to get the best answer available, and it gives you a good argument, if audited. However, if you have other things to hide, you've got more worries than one deduction.
There are people who are paid to know the answers to these questions. Pay a small fee to get an answer in writing from a tax lawyer or tax accountant. That doesn't mean they are infallible, but you should be able to get the best answer available, and it gives you a good argument, if audited. However, if you have other things to hide, you've got more worries than one deduction.
Hmmm.........
Hmmmm.......Pardon me, I need to get back to reading "Glenn Beck's New Book"..... Now what was the name of that book?
at one time I really thought the same until my good friend, a FED agent long past dealing with tax cases (now into money laundering cases) spelled it out for me. Have fun out there and protect your assssets!
And yes I have a CPA and TAX attorney.
Hmmmm.......Pardon me, I need to get back to reading "Glenn Beck's New Book"..... Now what was the name of that book?
LifeofReiley
Well Known Member
David Shelton
Well Known Member
Our Experience
Our RV-10 was a legitimate business expense according to our tax accountant. We owned it for about a year and used it as a test-bed and demo airplane for our cargo pods and motorcycle carriers. If you have a legitimate business use, you should have no problem. However, I wouldn't take the risk if your use is in a gray area. -David
www.MotorcyclePilot.com
Our RV-10 was a legitimate business expense according to our tax accountant. We owned it for about a year and used it as a test-bed and demo airplane for our cargo pods and motorcycle carriers. If you have a legitimate business use, you should have no problem. However, I wouldn't take the risk if your use is in a gray area. -David
www.MotorcyclePilot.com
Turning the previous thoughts around, it never hurts to try. What will they do - disallow your deduction? Oh, well.
My mother moved to assisted living this year, and I took several trips there to prepare MY home (I bought her house several years ago so she could afford to stay there) for sale / rent. The home is now a business. As it turns out, I flew very little this year. Thus, my BUSINESS trips home to repair and place the home under contract constitute 50% (round numbers) of the hours operated.
With my CPA's encouragement, I will be totaling all aircraft related expenses this year, multiplying by % used for business (.5), and entering this amount as a business deduction. That includes insurance, state property tax, hanger, and annual inspection. Should be on the order of a $4,000 deduction on my itemization.
I will ALSO reimburse myself for fuel cost (much less than $1.25/mile) for the actual trips.
If they reject it, fine - it will simply reduce the amount of my rebate. Big deal.
But, if you don't ask they most certainly will not reimburse you.
My mother moved to assisted living this year, and I took several trips there to prepare MY home (I bought her house several years ago so she could afford to stay there) for sale / rent. The home is now a business. As it turns out, I flew very little this year. Thus, my BUSINESS trips home to repair and place the home under contract constitute 50% (round numbers) of the hours operated.
With my CPA's encouragement, I will be totaling all aircraft related expenses this year, multiplying by % used for business (.5), and entering this amount as a business deduction. That includes insurance, state property tax, hanger, and annual inspection. Should be on the order of a $4,000 deduction on my itemization.
I will ALSO reimburse myself for fuel cost (much less than $1.25/mile) for the actual trips.
If they reject it, fine - it will simply reduce the amount of my rebate. Big deal.
But, if you don't ask they most certainly will not reimburse you.
Garage Guy
Well Known Member
Operating limitiations?
Wondering if anybody in this thread is concerned that their operating limitations might say something like "No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements"?
In my case, my insurance policy says to be covered I have to operate my aircraft in accordance with its operating limitations... Putting these together it kind of looks to me that I can fly insured, or I can fly for deductible business purposes, but not both at the same time.
Of course, I'd be claiming a deduction only after I've successfully concluded a flight without incident, so I suppose in practice there wouldn't be a conflict. As long as the FAA and the IRS don't start talking to each other... now there's a scary thought.
--Paul
Wondering if anybody in this thread is concerned that their operating limitations might say something like "No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements"?
In my case, my insurance policy says to be covered I have to operate my aircraft in accordance with its operating limitations... Putting these together it kind of looks to me that I can fly insured, or I can fly for deductible business purposes, but not both at the same time.
Of course, I'd be claiming a deduction only after I've successfully concluded a flight without incident, so I suppose in practice there wouldn't be a conflict. As long as the FAA and the IRS don't start talking to each other... now there's a scary thought
.--Paul
LifeofReiley
Well Known Member
That's a thought... I think too many are taking this thread personal. All I was trying to state was BE Very careful out there. There are Business uses that will work, but not many.
Wondering if anybody in this thread is concerned that their operating limitations might say something like "No person may operate this aircraft for other than the purpose of meeting the requirements of ? 91.319(b) during phase I flight testing, and for recreation and education after meeting these requirements"?
In my case, my insurance policy says to be covered I have to operate my aircraft in accordance with its operating limitations... Putting these together it kind of looks to me that I can fly insured, or I can fly for deductible business purposes, but not both at the same time.
Of course, I'd be claiming a deduction only after I've successfully concluded a flight without incident, so I suppose in practice there wouldn't be a conflict. As long as the FAA and the IRS don't start talking to each other... now there's a scary thought
--Paul
Aviator168
Well Known Member
If your company makes avionics, the plane is part of the testing tool. You can definitely write the whole thing off.
Resident CPA question
I can see that there could be some opportunity to write off expenses. It might be a bad idea to try to depreciate the asset value of the aircraft, because I think depreciation has to be recovered when the asset is sold. Hope some knowledgeable CPAs can help out here.
Larry
I can see that there could be some opportunity to write off expenses. It might be a bad idea to try to depreciate the asset value of the aircraft, because I think depreciation has to be recovered when the asset is sold. Hope some knowledgeable CPAs can help out here.
Larry
So along the same lines as above let me pose a scenario and I'd like feed back as to whether or not this violates the operating limitations. Disclaimer: of course I realize anything expressed in this thread is opinion only and is not guidance or tax advice.
1) you have a photography business - can you use your aircraft to take aerial shots? If you are doing this, can you deduct the operating costs? can you direct the fixed costs?
2) you have an aerial camera business - making gyro stabilized platforms for aerial filming. Can you use an experimental aircraft as a test bed for your systems? Can you actually use the aircraft for hire as a platform to perform aerial cinematography?
3) if you are doing 2 above, can you deduct the operating costs? the fixed costs?
It would appear to me based upon the limited knowledge that I have that you may be able to legally do #1, but 2 and 3 appear to me to be a violation of the operating limitations.
Thanks for any and all feedback/opinions, it is greatly appreciated.
I'm not a CPA but I don't know why it would be a bad idea. Yes, if you depreciate the plane and later sell it, you'll have to pay taxes. So it's save on taxes now and pay them later. Deferring taxes - how can that be bad? It's like getting an interest-free loan from the man.
As a professional pilot, I have to keep my ratings current; i.e. SELSG. They are all Commercial ratings, so everytime I rent an airplane or glider I write it off. BUT, I only rent to stay current. With my schedule I only go fly little airplanes once a year or so. Which means a full check out. I write the whole thing off. I plan on writing my RV off every 90 days for currency flights.
Rick Maury
Rick Maury
Aviator168
Well Known Member
I would rather do this.
1) You get financing to purchase the kit and build the aircraft.
2) Lease it to your company
3) Write off the leasing payment from your business.
Wouldn't we all? But that is one of the things I was led to believe we are specifically prohibited from doing.
Why? Because you cannot get renters insurance for a home built aircraft.
If you want to try that route, you are being more aggressive than I am (or anyone else I know). Just do fixed asset depreciation as if it were a home office (e.g. depreciating "that portion" of your "asset" used for business).
Oh, and get an accountant to approve it who is prepared to fight the IRS on it...
Aviator168
Well Known Member
That will work as well.
However, this is what one of my friends have done. Basically, he formed a company to make some avionic software and needed a plane to test it on. His CPA set it up in such a way that the company can take 401K investment. He than rolled over part of his 401K into the company as operating capital and he has not taken any salary from the company yet. He's only in the late 40s, way too young to be able to take out the 401k and not pay any taxes and penalties. This way, he can spend the money at a much younger age.
My friend didn't use these people, but they can do it too.
http://www.401ksmallbusinessfinancing.com/index.html
another link
http://ezinearticles.com/?How-Can-I-Use-My-401K-to-Invest-in-a-New-Business-Or-Franchise?&id=2730708
However, this is what one of my friends have done. Basically, he formed a company to make some avionic software and needed a plane to test it on. His CPA set it up in such a way that the company can take 401K investment. He than rolled over part of his 401K into the company as operating capital and he has not taken any salary from the company yet. He's only in the late 40s, way too young to be able to take out the 401k and not pay any taxes and penalties. This way, he can spend the money at a much younger age.
My friend didn't use these people, but they can do it too.
http://www.401ksmallbusinessfinancing.com/index.html
another link
http://ezinearticles.com/?How-Can-I-Use-My-401K-to-Invest-in-a-New-Business-Or-Franchise?&id=2730708
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