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AVIATION TAX PLANNING – How does Advocate Consulting Legal Group, PLLC integrate with my Great Accounting/Legal Team that knows my business?
Aircraft operation planning is unique because it requires the integration of Federal Aviation Regulations, Department of Transportation Regulations, federal income tax issues, state sales tax issues, interstate liability issues, and aircraft economic issues.
We do not compete with your other advisor’s services; we compliment them. By working with your advisors, Advocate develops an aircraft plan, integrates it into your overall planning, drafts necessary documents, and coordinates its execution.
Our services include:
- Identify the proper entity structure to own your aircraft.
- Design an operational structure that complies with FAA noncommercial limitations, while meeting IRS trade or business requirements, and controls liability exposure.
- Each client is assigned to an aviation tax attorney/accountant service team who are responsible for executing the client’s planning.
- The legal advisor drafts aircraft purchase agreements, operating agreements, aircraft leases, management agreements and the like, and files them with the FAA when appropriate.
- The accounting advisor, working with your legal advisor, provides documentation advice, outlines recordkeeping requirements, reviews compliance, and prepares tax returns.
- When you get examined by taxing or regulatory authorities, your service team working with our internal specialists will defend you at no additional charge while your engagement is in place.
This is a highly specialized area of the law; make certain your advisor is an attorney who understands aviation tax. Our legal department assists in new aircraft acquisitions nearly every day. Our accounting department deals in aviation tax compliance and examinations daily; our law firm serves over 1,500 aviation clients.
Check out our Engagement Letters
Aircraft Tax Accounting Aircraft Sales Tax Planning
IRS – Aircraft Audit Aircraft Depreciation Calculation
Aircraft Timeshare Agreements FAA Compliance
General Aviation Law Part 91 and Part 135 Operations
Aircraft Liability Planning Aircraft Registration
Fringe Benefit – SIFL Calculations Fractional Ownership
Aircraft Co-Ownership Aviation Tax Compliance
Personal Use of Aircraft Passive Activity & Hobby Loss
Advocate Serves Hundreds of Aircraft Operators Throughout the Country
What Can We Do For You?
The aviation professionals at Advocate provide turnkey aircraft tax consulting services designed to maximize income tax savings, minimize sales and use tax costs, control property tax, and avoid federal excise tax, all within the strict mandates of the Federal Aviation Administration Regulations. Advocate Consulting is an aviation business law firm comprised of Aviation Attorneys, Certified Public Accountants, Consultants, and their respective staff, who dedicate their careers to furthering the interest of general aviation through the integration of Federal Aviation Regulations, Internal Revenue Code requirements, and review of liability from aircraft operations. The ultimate success of an integrated aviation plan will involve an interaction between the client and a member of the Advocate team.
This integrated aviation plan will comply with Federal Aviation Regulations, (FARs), only to the extent that the client understands and follows instructions as to documentation and payments. The ability to legally avoid sales and use tax varies by state, and again, care must be taken to execute the transactions correctly. This plan is not designed to create income tax deductions not otherwise available under the Internal Revenue Code. It is designed to review the effectiveness of the proposed structure from a tax perspective, and maximize the possible income tax deductions including aircraft depreciation, while avoiding limitations imposed by the Internal Revenue Code relating to basis, fringe benefit limitations, passive activity limitations, and the like. Income tax deductions result only from the use of the aircraft in a trade or business that is operated for profit. Deductions are not available for expenses incurred for personal use, or in the furtherance of a hobby. It is important that the aircraft be properly integrated into the business in such a manner that its use does not violate the FARs, while still resulting in ordinary and necessary expenses that are reasonable in amount incurred in a trade or business.
There is liability that naturally flows from the operation of an aircraft. Organizational structures may serve to limit liability, but certain operational decisions will impact this potential liability as well. Aircraft insurance policies are mere contracts, and the scope of purchased protection must be clearly understood. Advocate is available to assist you in understanding how you might enhance general and passenger liability protection beyond organizational structures, but liability can never be totally removed.
Advocate serves its clients through a systems-approach led by individual client service teams. Your team will become intimately familiar with the aviation portion of your business, and will work with your core advisors to integrate the aviation aspects into your overall business and tax structure. You should feel free to share any documentation and ideas with them so we can work together to deliver the most effective service to you.
THE DESIGN STAGE
The design process begins with a general review of a client’s income tax position, and anticipated use of the aircraft. Based on this review, we will propose an aircraft acquisition structure designed to minimize aircraft sales tax and meet income tax goals consistent with FAA regulations with a view toward limiting liability.
THE IMPLEMENTATION STAGE
After the client has approved the tax planning program, our firm will begin the implementation process by taking responsibility for entity design, preparation of contractual agreements, and registration before federal, state, and local tax and regulatory agencies. We will also brief the client on responsibilities and record-keeping requirements mandated by both the Federal Aviation Administration, and tax authorities.
THE MONITORING STAGE
After implementation, the monitoring stage of the program begins. Often, the client’s actual aircraft use differs from expectations, and it is necessary for them to modify original plans to meet new realities. Advocate schedules a mid-year review with each client for the purpose of reviewing the adequacy of documentation, reviewing the actual experience of the aircraft operator, projecting taxable income or loss from aircraft operations, and developing a relationship with the operator’s core advisors. Advocate is responsible for preparing income tax returns, or schedules for inclusion in income tax returns, and sales tax computations, for all aircraft operations. These tax returns and schedules include important elections necessary to maximize the effectiveness of a tax planning program. In the event that a tax or regulatory agency initiates an inquiry, or conducts an examination, Advocate will represent its client at no additional expense.