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You are here: Home / Archives for passive activity

Tax Trap for 2011 – Failure to Elect Grouping of Aircraft Company and Operating Company

Second in a series of articles on “How to Survive an IRS Audit of your Aircraft”

 

There are many valid business reasons to separate aircraft ownership from the operating companies it serves.  These often include liability protection, ownership differences, and managerial issues to name a few. Although it is often beneficial to segregate ownership for non-tax reasons, it is important to avoid inadvertently causing the aircraft entity to be treated on a “stand-alone” basis for passive activity income tax purposes. 

 » Read more about: Tax Trap for 2011 – Failure to Elect Grouping of Aircraft Company and Operating Company  »

Filed Under: Aircraft Deductions, Aircraft Income Tax Tagged With: advocate consulting, aircraft tax, aviation tax, cirrus tax deductions, economic profit expectation, grouping activities, grouping election, hobby loss, ordinary and necessary, passive activity

IRS PASSIVE ACTIVITY RULES: PROVING THE TIME DEDICATED IN YOUR BUSINESS

All tax practitioners are aware how unyielding the tax code can be to those who lack sufficient planning and learn of the law’s arcane requirements only after the fact. One recent tax court case re-affirming this lesson is Williams v. Commissioner, TC Memo 2014-158 (August 2014), where a taxpayer lost out on deductions from his aircraft business due to his failure to provide the court with sufficient proof of his day-to-day work.

 

 » Read more about: IRS PASSIVE ACTIVITY RULES: PROVING THE TIME DEDICATED IN YOUR BUSINESS  »

Filed Under: Aircraft Income Tax, Front Page, Passive Activity & Hobby Loss Tagged With: economic profit expectation, grouping activities, grouping election, pass, passive activity

UNDERSTANDING AND PLANNING FOR TAX RISKS OF OVERLAPPING LOAN GUARANTIES

When a financed aircraft is owned in a special-purpose company, which lacks assets other than the aircraft, it is typical and understandable for the financing bank to insist that, in order to extend this special-purpose company a loan to purchase the aircraft, that loan must be guarantied by another, more solvent person or company.  In fact, banks will often seek multiple, overlapping guaranties—for example, from both spouses a couple, or from an individual and another company owned by that individual. 

 » Read more about: UNDERSTANDING AND PLANNING FOR TAX RISKS OF OVERLAPPING LOAN GUARANTIES  »

Filed Under: Aircraft Income Tax, Front Page, Tax Planning Tagged With: advocate consulting, aircraft tax, aviation tax, economic profit expectation, grouping activities, hobby loss, passive activity

KEY TAX EXPOSURE AREA: PASSIVE ACTIVITY PROTECT YOURSELF WITH PROPERLY FILED ELECTIONS

A notable milestone in the cat-and-mouse game of individuals seeking to minimize tax burden and Congress making new laws to end potential shelter activity is the Passive Activity Rule, which was originally enacted as part of the Tax Reform Act of 1986, and which recent developments have brought prominently to the minds of tax advisors.  In particular, an important one-time opportunity to avoid being trapped under this rule arises from new IRS regulations issued in November 2013 due to the new net-investment income tax passed as part of the 2010 Patient Protection and Affordable Care Act (a/k/a “Obamacare”). 

 » Read more about: KEY TAX EXPOSURE AREA: PASSIVE ACTIVITY PROTECT YOURSELF WITH PROPERLY FILED ELECTIONS  »

Filed Under: Aircraft Income Tax, Front Page, Passive Activity & Hobby Loss Tagged With: aircraft tax, economic profit expectation, grouping activities, grouping election, ordinary and necessary, passive activity

How to Survive a Tax Audit of your Aircraft

First in a Series – Federal Income Tax Examinations

 

Introduction

There has been an increase in federal income tax audit activity for high net-worth individuals and profitable small businesses.  This often extends to all business activity, including aircraft operations.  Such examinations generally last for months and require education of the auditor in the business interrelationship between the aircraft and the underlying business it supports.

 

 » Read more about: How to Survive a Tax Audit of your Aircraft  »

Filed Under: Aircraft Income Tax, Front Page, Tax Planning Tagged With: advocate consulting, aircraft tax, aviation tax, economic profit expectation, grouping activities, hobby loss, ordinary and necessary, passive activity, Personal Use

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Corporate Jet Investor Town Hall – Finance, Tax and All That Jazz (Webinar Replay)

View a replay of the town hall by clicking the video above, or following the link here.

As you know, these are unprecedented times for business aviation. We invite you to join the Corporate Jet Investor Town Hall as a way of staying connected and informed during this period.

Moderated by Alasdair Whyte, co-founder Corporate Jet Investor, each week CJI will tackle a different issue or topic through the knowledge of as many expert participants as possible.

 » Read more about: Corporate Jet Investor Town Hall – Finance, Tax and All That Jazz (Webinar Replay)  »

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Advocate Consulting Legal Group, PLLC. 3555 Kraft Rd. Suite 240 Naples, FL 34105 and 1300 N. Westshore Blvd. Suite 220 Tampa, FL 33607. Suzanne Meiners-Levy, Esq. (239) 213-0066. Tax Disclosure. We inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under federal tax laws, specifically including the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Privacy Policy. Terms of Use.