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How does personal use of a business aircraft affect tax treatment?


 

Transcript:

Income tax deductions for aircraft depend on business use. As a result, personal use will always have a negative impact, although to what degree depends upon the exact structure and nature of the use. When a company plane is used personally by a reasonably compensated employee, he or she has taxable income, reflecting that something of value was given by the company. An election is available called the Standard Industry Fare Level rule to compute this income through a favorable formula that typically equals less than the company’s total cost in providing a flight. Further, if the passenger is treated as a so-called “specified individual,” generally meaning an owner or a high-ranking person, and the flight was for personal entertainment or recreation, it will cause a portion of the company’s aircraft costs for the year to be non-deductible. These calculations are quite involved and should not be undertaken without professional assistance.

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