As year-end approaches, now’s the time to review your 2024 aircraft records. In doing so, you’ll ensure proper tax reporting of your aircraft activity.
The rules for deducting aircraft expenses are very specific and require detailed records and documentation. But this can be easily managed with the right planning and processes.
In late 2013, the IRS released the final regulations that govern how company provided business aircraft expenses can be deducted. Non-entertainment use of your aircraft is potentially deductible if the use is properly substantiated.
Taxpayers are required to track the usage on a flight-by-flight, passenger-by-passenger basis. This means you must look at the primary purpose of each flight, but also the primary purpose of each passenger onboard. Having family and personal guests onboard business flights will likely impact the deductibility.
In addition, the IRS requires written, contemporaneous records to substantiate deductible aircraft use. Records can include emails, meeting minutes, agendas, calendar invites, social media posts, checklists, and pictures.
This documentation can be in the form of emails, meeting minutes, agendas, calendar invites, social media posts, check lists, pictures, etc. The information should be enough for an auditor to connect the dots and understand the purpose of your trip.
Every aircraft owner is different, and best practices can vary from owner to owner. It’s important to implement a process that works for your organization to ensure that the required information is being maintained without becoming overly cumbersome.
The IRS has tightened up their audit processes for business aircraft. The good news is that we’re seeing a streamlined approach on recent audits. Now is the perfect time to review your records and get ready for tax season!