On occasion I'll do a N-number search of planes I see either driving past an airfield or pictures of to see model types that I'm not familiar with.

I've noticed more than one registered to an LLC or other small company.

Does anyone here have their plane registered like that? Does it help with tax write-offs? Has anyone opened a "business" to fly their plane(s) under?

I'm not insinuating anything illegal, but maybe something like an 1-man aerial photography company could justify owning a plane even if it didn't make a profit...

I own a real estate company. My company purchased a plane so I could take arial photos of properties, check out mountain and desert properties possibly for sale in the future, corporate travel and whatever else is necessary. If I ever get a listing in the Idaho or Utah wilderness or desert I'll have a lot of good data to work with. My real estate company is an LLC. The company is responsible for the purchase, hangar, fuel, maintenance, etc.

Before I bought my Maule I owned a share of a Cessna 182. The partnership was incorporated as an LLC to formalize our ownership rights and responsibilities. It is a common framework for partnerships.

My Cub is registered in a LLC. We did it back when my son was a new pilot and was keeping it at the college town he was getting his education at. It was intended to be a liability firewall if something happened. (yes, I know lawyers can burn their way through such a simple firewall, but cost was low to form LLC, and it does provide a little bit of dissuasion.....)

lc

If applicable, having your company own an airplane is one of the best things you can do. Liability protection is really secondary. Its all about tax liability.

The IRS allows you to rapidly depreciate the entire cost of an airplane under Section 179. I think in 2013 this is up to $500k. This means an entity can buy an airplane up to $500k and pay NO TAX on that income. Furthermore, if you can register it in a state that is more favorable to airplane purchases such as MA, you will pay NO SALES TAX on said purchase.

RE: liability... this is a question for your atty, but I believe that an LLC is not the best choice as it follows your SS# where an S or C Corp is its own legal entity. (questions for an expert, not an internet yahoo like me) Also, choose the state wisely where it is created. Different states afford different protections. I believe DE is the most favorable for protection.

I have had fantastic luck with Aviation Tax Consultants in FL. Worth every penny IMO.

http://www.advocatetax.com/

You don't need an LLC or any other corporate entity to depreciate and write off business expenses. The IRS just wants to see business activity. If you use the plane for business and personal use, the percentage that's business use is all you can legally deduct, but as Kevin noted you can depreciate the plane too.

Bear in mind that once you depreciate that plane down to zero, or whatever, THAT is now the "value" of that asset according to IRS. So, sell it for a bundle....that bundle is PROFIT.

I have Ben told that generally the IRS wants to see a profit within six or seven years. Doesn't mean you must make a profit.....but you're likely a good target for audit if no profit for many years.

Find an accountant who understands this stuff, and pay them to get this stuff sorted out, and be conservative...don't get greedy. Most of all, keep good records.

MTV

MTV is right about the profit part. You can do the LLC and such and not show a profit. I put mine in my S corp. It does make a profit and I bought the 185 for a few reasons, first best plane I ever owned, so I wanted one back. Besides the Birdog was the slowest method to get between two points. Second, some of you may have noticed, there is no paper investments that bring any kind of return as a hedge against inflation. Certain aircraft will always increase in value, mainly the ones that have a commercial life besides recreation. And lastly, the deduction, I was able to write off the bird and the mods completely on last years taxes, a rather large chunk of change.

Now my subchapter S corp leases aircraft, it does have a natural fit, so it may not work for everybody. I do have a C corp that does engineering work and Geology and has some aircraft as well. The C Corp pays it own taxes as a separate entity so the deduction does not have the direct influence on your personal taxes. An S corp flows all its income to the individual(s) owning its personal taxes (this is where the tax increases hurt small businesses, they are not rich, its their company income, not interested in a political discussion here).

LLC's are essentially partnerships. Realize you will need to have your accountant file a schedule K for it. They do charge and you also need to get an EIN (social security number for the company) from the IRS. So if you can gain something from the liability stand off, have something business related so you can take the deduction. Or you have a snaky partner, then having a company for the aircraft is a decent idea. Just realize there is a cost to form any of these and annual maintenance cost that vary state by state.

There are other advantages, but they skirt the grey of the law and can land you in hot water. Lets say you have a corporation outside of your home state, like California. It is a state that wants a large bite out of your ass every year for owning an aircraft. So you form an LLC in Delaware and take delivery in Delaware, or Oregon. Why, no sales tax. Then this company pays for a tie down in some remote skydiving airport in Delaware. Perhaps buys some gas once or twice a year there and have receipts to show it. This gets around the shark-like attitude of California. This is not really legal, but done a lot. The better solution is move someplace else, overall it is cheaper and carries less stress and you do not have to play tax games.

My CPA said something about 50% has to be business or none is a write off. As my personal plane if I use it for business I can write off what a commercial ticket would cost. I use my Maule for 95% pleasure. If I didn't care about an audit I would be more creative.

IRS regs say nothing about profit -rather they are looking for intent to make a profit. Of course making a profit is good proof of intent.

Be careful of hobby loss rules. Airplanes are audit flags. Believe it.

+1 on hiring professionals to keep you on the right track and cover your 6 if you end up in front of The Man.