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7 Answers

Flying My Business Partner and Myself to Client Meetings

Asked by: 2636 views , ,
Private Pilot

Here's the scenario:

My business partner and I buy a plane (we are in a two-person LLC so it could also be the LLC buys a plane).  I, holding a private pilot's license, fly us to business meetings.

Today, we fly commercial (150-200 flights per year) for which we are personally reimbursed by the clients through our company.

Logically, we would like to continue to be reimbursed for the cost of travel.

Can we:

1. Bill and be reimbursed by the client for our costs when I fly our plane without going afoul of the faa regulations for private pilot?

 - We both own the plane, so it could be rented, prorated to each passenger, etc.

 - If not, what ratings would I need to have?

2. Depreciate the plane without going afoul of the IRS?

I would likely fly the plane a limited amount for non business purposes (fly it to service centers, conduct supplemental flight training, etc.)

I appreciate any guidence on where to look on this including any referrals on who I can talk to in depth.

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7 Answers

  1. superbird3000@yahoo.com on Oct 05, 2012

    You should always ask your local FSDO for absolute clarification, but this seems like a classic case of “incidental to business” to me. You are not actually flying the aircraft for hire, but using merely as a tool to get from A to B. They also state that you may be reimbursed for “operating expenses” that aren’t above and beyond the cost of the trip, such as fuel, oil and parking.

    The general rule I teach my students is that if the same trip could be made in a rental car, and you could legally be reimbursed for it, then you can use the airplane; as long as your act of flying the trip isn’t generating any profit.

    As for the IRS, I am less clear on that, but if I understand it right, you have the same rights with this airplane expense as you would with other business expenses, as long as you separate your private use from company use. Again, a clarification with the IRS would be the only way to know for sure.

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  2. Luke on Oct 06, 2012

    Thanks for the guidance. The use of the airplane is without doubt for business. I don’t think there will be a problem there. Where I am still unclear, is how my business partner will be treated. If she is flying with me to meetings, I don’t want to run afoul of the FAA with how we are treating the cost of the plane. I hold a private pilot rating so I think I can prorate the cost of the operations and each of us bill the client separately.

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  3. Sam Dawson on Oct 06, 2012

    Don’t ask the FSDO. They may or may not give you the correct answer. I would go to an attorney with aviation experience.

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  4. Wes Beard on Oct 08, 2012

    If you are flying your aircraft 150-200 times a year for business trips I don’t think that the airplane trip is “just incidental to your business.”

    There are three things that I look for when I determine if a private pilot can be reimbursed for their flight. (1) Is the pilot going to that destination anyways (meaning they are not influenced by the will of others in any respect). (2) Are there any passengers on board and (3) is any business property going to be transported to the business meeting?

    A “Yes” answer to any of these and the private pilot cannot accept reimbursement under the regulations.

    Perhaps an opinion from the FAA legal counsel: http://www.faa.gov/about/office_org/headquarters_offices/agc/pol_adjudication/agc200/interpretations/data/interps/2009/Mangiamele.pdf

    I also blogged about this very issue awhile ago:

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  5. Ron Klutts on Oct 08, 2012

    As long as your business partner has a need to go as well and your not taking her to a meeting that you wouldn’t otherwise be going to then you should be fine. As long as you have a need to be there then how you get there isn’t the issue. You could drive, take airlines or a bus, it’s all the same.

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  6. superbird3000@yahoo.com on Oct 08, 2012

    Sam, yes, he should absolutely ask the FSDO, and get it in writing. From an enforcement standpoint that is as good as gold. If the FAA says OK, then even if a different division disagrees it becomes an internal matter, not to mention an approved precedent.

    We get letters of interpretation and clarification from them all of the time, and they have no leverage to go back on it without issuing another letter of interpretation/clarification. However, even if they do that, all they can do is have him cease his activity from that point forward.

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  7. Matthew Waugh on Oct 11, 2012

    You’re fine flying the plane to business meetings – basically if you would have flown commercial to the meeting, you can go in your own plane (and take anybody else from your company who would have gone commercial with you).
    You can be reimbursed for expenses – but it’s your company, billing how you like – you want to cover your costs but you don’t need to call it out as fuel and oil.
    You own the asset, you can depreciate it. HOW you depreciate it you’re gonna need to consult a tax attorney – but it’s a fixed asset that depreciates over time.

    This is an ideal use of a GA plane – don’t let scare stories talk you out of it – this is cut and dried OK.

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