Category: aviation tips

Gulfstream Jet Head On Aviation Attorney

Bonus Depreciation For 2015 Aircraft

Bonus Depreciation For 2015 Aircraft

Gulfstream Jet
Bonus depreciation may still apply

I read an interesting article in Aviation Week about the resilience of the market for the largest business jets.  Their resilience as the aircraft of choice for ultra high net worth individuals, governments and corporations is no surprise.  One reason for this were the long production cycles for these aircraft.  New Gulfstream business jets have always been “built to order” and can take a year or more to complete.  The planes on the assembly line during the crash years of 2008-2009 had been on order for some time before, and there was a healthy backlog of others waiting in line at that time.

The tax benefits for these buyers remains as well.  Aircraft bonus depreciation deductions, which have largely been phased out going forward still applies to certain large business aircraft placed in service prior to January 1, 2015.  This can occur in one of two scenarios, first, if the aircraft is considered “long production property”, or second, if the aircraft otherwise met the requirements for 50% bonus depreciation, part of which required that there was a written binding contract in place for the plane prior to 2014.

Contact me for an analysis of your tax savings.

Ari Good, JD LLM, an aviation tax lawyer is the shareholder of Good Attorneys at Law, P.A. He graduated from the DePaul University College of Law in 1997 and obtained his L.L.M. in Taxation from the University of Florida in 2005. He has helped hundreds of clients to defend themselves against the tax authorities and negotiate their liabilities, and worked with aircraft buyers, sellers and operators in complex tax transactions.

Call us at (786) 235-8371 for detailed information.

Updated Florida Form to Report Sales and Use tax on Aircraft

Florida Introduces New Form to Report Sales and Use Tax on Aircraft

The Florida Department of Revenue (FL DOR) has updated its reporting form on the sale and use of aircraft in Florida. Form DR-15AIR (Sales and Use Tax Return for Aircraft) replaces Form DR-42A (Ownership Declaration and Sales and Use Tax Report on Aircraft). The new form provides explicit guidance on when to report taxes on the sale and use of aircraft in Florida.

When Form DR-15AIR Should be Used.

An individual should report sales and use tax on the purchase of aircraft when they don’t pay Florida’s sales tax to the seller. Form DR-15AIR clarifies the three (3) situations when an individual should instead pay a 6% “use” tax:

1.  An individual purchases an aircraft from a person who is not a registered aircraft dealer and the sale or delivery of the aircraft occurs in Florida;

2.  An individual purchases an aircraft in another state, territory of the United States, or District of Columbia and is brought into Florida within six months of the purchase date; or

3.  An individual purchases an aircraft in a foreign country and is brought into Florida at any time.

This use tax is in addition to any county discretionary sales surtax. The discretionary sales tax applies to the first $5,000 of the purchase price and rates vary by county.

When Sales and Use Tax is Due.

Florida Sales and Use Tax
. Taxes Not Included

Florida’s use tax is technically due when an individual brings an aircraft into Florida for use or storage. The corresponding tax returns and tax payments, however, are due only on the 1st day of the month after the actual month when:

1.  The airaft was purchased in Florida;

2.  The aircraft was delivered to a Florida location; or

3.  The aircraft enters Florida for use or storage.

The tax returns and tax payments are late if coming after the 20th in the month they are due. Late returns and payments are penalized a minimum of $50 or 10% of the amount due, whichever is less. Interest is dues on late payments as well.

Exceptions to Sales and Use Tax.

Exceptions to Florida’s sales and use tax on aircraft continue to apply, including:

1.  The value of an aircraft, boat, mobile home, or motor vehicle an individual trades in reduces the taxable purchase amount. The person accepting the trade in and selling the aircraft must be the same.

2.  An individual removes an aircraft purchased in Florida from the state within 10 days after the date of purchase, or 20 days after completion of repairs or alterations.

3.  A credit for taxes pad in another state, territory of the U.S., or Washington D.C. No credit is available for taxes paid in another country.

4.  An exemption from the tax for non-residents of Florida when their aircraft enter and remain in Florida for 20 days or less during the six-month period after aircraft purchase. This exemption also applies to non-resident owned aircraft that enter Florida for the purposes of flight training, repairs, alterations, refitting, or modification.

Ari Good, JD LLM, a tax, aviation and entertainment lawyer, is the Shareholder of Good Attorneys At Law, P.A. He graduated from the DePaul University College of Law in 1997 and received his LL.M. in Taxation from the University of Florida.

Contact us toll free at (877) 771-1131 or by email to info@goodattorneysatlaw.com.

SIFL Rates Rise for the Fourth Consecutive Term

SIFL Rates
SIFL rates on the rise again.

SIFL rates are important numbers used to calculate the taxable income you receive when taking a personal flight on employer provided aircraft as a fringe benefit.  The U.S. Department of Transportation recently released new SIFL rates for the 1st half of 2013 and there was an increase of 3.33% overall.  This marks the fourth consecutive term that SIFL rates have significantly increased, with a total hike of over 17% since July of 2011.  The following table shows these new numbers:

 

 

SIFL Rates for 1st Half of 2013

Time Period of Flight 01/01/2013 – 06/30/2013
Miles: 0 – 500 –> .2655
Miles: 501 – 1500 –> .2024
Miles: > 1500 –> .1946
Terminal Charge –> $48.54

Aircraft Multiplier

Weight Class

Control Employee

Non-Control Employee

< 6,000 lbs. 62.5% 15.6%
6,001 – 10,000 lbs. 125% 23.4%
10,001 – 25,000 lbs. 300% 31.3%
> 25, 000 lbs. 400% 31.3%

Crunching these numbers, a control employee would have a $598.59 taxable fringe benefit for a 750-mile flight, a 3.23% increase from the prior term.

If you’re unfamiliar with SIFL rates and whether they may apply to you, please read my earlier blog post.   http://goo.gl/Bfmx6

–          Ari Good

Ari Good, JD LL.M. is the Shareholder of Good Attorneys At Law, P.A.  Mr. Good received his BA, With Distinction, from the University of Michigan in 1993, his law degree from the DePaul University College of Law in 1997, and his LL.M. (Masters of Law in Taxation) from the University of Florida.  A long-time supporter of the general aviation community, Mr. Good serves aircraft buyers, sellers, dealers, brokers, flight schools and commercial operators worldwide in contractual, operational and tax matters. The firm’s services include federal income tax, state sales and use tax and excise tax planning, and defending both state and federal tax audits.  Mr. Good is a frequent speaker in aviation tax law and a proud member of The Florida Aviation Trades Association and NBAA.

Weather Weary: How to keep outside conditions from damaging your aircraft

Owning an aircraft is a major investment. Even before you buy one, you need to spend countless hours preparing, training, financial planning, and making proper space arrangements in anticipation of becoming an owner. This is why the idea of keeping it safe and in good condition, is not only invaluable, it’s priceless. But things happen, and weather has a way of surprising us when we least expect it. This can often mean some serious damage to a plane, and even more damage to your wallet.

Each year, numerous aircraft are damaged due to the simple fact that they were not appropriately prepared for inclement weather while on the ground. When your aircraft is parked, wind, and even jet efflux, can be your worst enemy. Even in a hangar that’s not properly equipped, negligence in weather preparation can cost you thousands of dollars, and time. It’s important to take a few simple preventative steps to keep your aircraft safe while it’s parked, to ensure that your plane stays in one piece, and to give you piece of mind.

Aircraft, by nature, are designed to fly. This may sound obvious, but it’s easy to forget that due their aerodynamic structure, even the smallest amount of wind in the wrong direction can lift your plane onto its side, or knock it over. The trick is to use your plane’s aerodynamics to your advantage. Always try and tie your plane into the wind. If your nose is facing into the wind, then the airflow will be distributed evenly over the plane’s surfaces. Make sure that your aircraft is tied very securely, however, as the same airflow can actually lift your plane off the ground, similar to how it would in flight. This is not the type of flight you want.

Make sure that you always employ a proper 3-point tie-down scheme, securing both wings and the tail. Most aircraft parking areas are equipped with fixed tie-down points and will be suitable for the 3-point tie. In the case that they are not, or if fixed tie-down points are just not available, you will need to find physical shelter for your aircraft. Park your aircraft behind something that can block the wind, and is unlikely to move or fall. Make sure any debris near the aircraft is cleared away, as strong winds can lift these things into the air and smash them into your plane.

Most importantly, the best protection against weather damage is to stay aware, and use common sense. If you are next to a plane that is improperly tied down, avoid tying down next to it. If you have a gut feeling that you missed a step while parking, go back and do it again. The time you spend being thorough is nothing compared to the time you’ll spend if you damage your aircraft.

At the end of the day, remember to trust your instincts. If it feels like a bad idea, it probably is. With a good amount of preparation, instinct, caution, and know how, you can keep your plane out of the repair hangar, and in the air. Which, after all, is exactly where you want to be.

Hangar vs. Tie-Down: Where to park your Aircraft

Although overlooked at times, where you store your aircraft is a very important part of being a responsible owner. Whether you decide to hangar it or tie it down, where and how you store your plane can change its re-sale value, extend its longevity, or conversely, cost you a lot of unnecessary expenses. It all depends on how you look at it. So let’s look at the pros and cons of storing your aircraft in a hangar versus keeping it tied down outside.

Obviously hangars can cost a lot of money. Money no object who wouldn’t want the private suite?  While prices differ, hangaring your aircraft can cost you up to $500-$600 per month, which is hundreds more than keeping it tied down outside. Tie-down fees can run anywhere from $50-$100 per month. There are reasons for this.. A hangar offers far better protection from natural elements, therefore reducing potential damage and devaluation of your plane. Tying your aircraft down outside, while costing far less money, will leave it exposed. This may be a wise financial decision if you are in an area where inclement weather is rarely an issue, not so much if you’re basking in the Florida sun or braving a New York winter. Always remember to check prices with FBOs before you land, as prices tend to change based on location.

There are two main types of hangars to consider should you choose that option. The most common single-plane hangar setup is known as a “t-hangar” for its shapeA t-hanger is designed to fit the shape of the body of your plane. It’s narrow in the back for the tail and wide enough for the wings in the front. The other is called a “shared hangar”. Shared hangars are more affordable, though with many planes sharing the same space you run a greater risk of “hangar rash”. Poorly maintained hangars or bad planning can increase your risks of hangar rash.

Tying down your aircraft, if done properly, can be a cost-efficient, and perfectly reasonable way to park at an airport. The best way to do this is known as the 3-point tie-down. The 3-point tie-down involves securely fastening your aircraft by both wings and the tail. If done right this will keep your plane from tipping due to jet/prop efflux or strong winds. Keeping your aircraft tied down rather than hangared can save you thousands of dollars per year, but again, it could cost you more in the long run due to repairs and maintenance in tough climates.

Whether you choose to hangar your aircraft or tie it downthe most important factor is that you feel comfortable where you keep your plane. Peace of mind goes a long way in aviation, and keeping your aircraft in good condition is essential becoming a confident pilot or owner. Always remember to check prices with your destination’s FBOs, and go with what makes you feel the most secure about your aircraft. With proper planning and wise decision-making, you’ll feel more confident about your craft, and how you fly.

Contact us for more information or recommendations to industry experts who can guide you in selecting your best options and help you plan your flights.