Gulfstream Contract Pilot Services
+1-360-531-1726

 

A Caveat and the Case Study Introduction
Taking flight: Tax Aspects of Aircraft Ownership

by Victor C. Anvick, MST, EA, Atis Group LLC, copyright March 2007

The acquisition and operation of a business aircraft can be divided into distinct phases, including preacquisition planning, acquisition, delivery and operation. Each phase has its own planning opportunities that can offer companies considerable savings — while they still operate within the bounds of regulatory compliance.

If aircraft owners don't address these issues, lost tax deductions, penalties and interest may be the least of their problems. If an accident or other incident occurs, job losses and unnecessary liability exposure far in excess of the enterprise's net worth could result from the failure to follow aircraft regulations.

Introducing the Case Study...

The only fictional element in the following case study is the name of the entities Greenacre Group and Greenacre Consulting LLC. All other elements are based on actual scenarios accumulated over 20 years of advising clients on the tax, financial and regulatory aspects of aircraft acquisition and operation.

The facts. Greenacre Group is a consortium of privately held entities, linked by common ownership, involved in diverse activities such as real estate, manufacturing and auto dealerships, with locations throughout the Western United States. The group wants to expand into additional markets not conveniently serviced by commercial airlines. It needs to establish firmer control over daily operations, protect its current markets from competition and develop closer relationships with customers, vendors and suppliers. In the event of an emergency, senior management wants to be on-site as soon as possible. Depending on charter or shared aircraft would be too expensive because the group's aircraft use is expected to be well over 200 hours a year. Accordingly, Greenacre Group decides to investigate acquiring its own plane.