Boladian Aviation Law Group Minimizes Your Tax Liability
Pre-Acquisition Tax Services
Bonus Depreciation and Modified Accelerated Cost Recovery System (MACRS) Depreciation
Boladian Aviation Law Group’s (BALG’s) attorneys draft and/or review purchase agreements to enable the aircraft acquisition to qualify for bonus depreciation, if it is available, applying their knowledge of the most current opinions and rulings of the Internal Revenue Service (IRS). We consult with clients regarding their eligibility for bonus depreciation and how to avoid recapture. BALG can also monitor an owner’s aircraft usage on an annual basis to make certain the aircraft continues to qualify for depreciation and support in the collection and review of documentation in preparation for potential IRS audits.
Corporate Structuring to Satisfy IRS and FAA Considerations
BALG’s specialists assist aircraft buyers in creating an ownership structure that complies with both Federal Aviation Regulations (FARs) and IRS rules in order to prevent the creation of an “illegal flight department company” and to minimize exposure to the unnecessary assessment of federal excise tax. Our team assists clients in developing the best strategy to ensure that the ownership structure minimizes tax liabilities while maximizing tax advantages.
Aircraft Registration and Selection of Aircraft Management/Charter Company
BALG’s attorneys consult clients with determining the best state in which to register their aircraft given their factual circumstances and where they intend to hangar and use the aircraft. Assisting in the selection of the state of registration is critical to avoiding the assessment of unnecessary taxes on the aircraft. In addition, BALG attorneys are ready to provide guidance on the selection of aircraft management and/or charter operators depending on whether the aircraft will be used in Part 91 operations, Part 135 operations or both.
Selection of Delivery State
BALG’s attorneys will assist aircraft buyers on the most optimal state in which to take delivery. There are states with fly-away exemptions and blanket sales and use tax friendly jurisdictions. In addition, many states require special forms to be completed and filed when an aircraft is being delivered in those states. BALG’s attorneys can also assist in completing and filing the requisite forms.
Post-Acquisition Tax Services
Multi-State Sales and Use Tax Guidance
Even though sales tax is only assessed at the delivery location unless the aircraft was delivered in a sales tax friendly jurisdiction, use tax can be assessed by any state at any time after the purchase of an aircraft. Each state has its own rules and some have exemptions and some do not. BALG attorneys will assist you in navigating through the various state minefields so that we minimize the possibility of getting a random use tax assessment in another state.
Multi-State Property Tax Guidance
Property tax is not just assessed in the state and county where the aircraft is based. It can also be assessed by states where the aircraft spends a significant amount of time. Some states deem 5% of overnights during the preceding calendar year as “significant.”
BALG attorneys know which states are more aggressive and will assist in developing the most cost-effective strategy in tax reporting.
Personal Use of Aircraft and Limits on Deductibility
Use of a company aircraft by owners, directors, executives or other employees for personal or entertainment purposes may result in the reduction of allowable depreciation deductions unless alternative methods of transportation are considered. BALG’s specialists will guide aircraft owners through the process of valuing non-business flights, using either the Standard Industry Fare Level (SIFL) or charter rate method and advise on strategically limiting personal use in order to minimize the negative impact on deductibility.
Federal Excise Taxes
Both private and commercial aircraft operators need to pay federal excise tax (FET) on either the purchase of fuel or the transportation of persons or property for hire. In some instances, the only obligation for FET are the taxes paid “at the pump,” but, in other instances, taxpayers must collect and remit FET by filing quarterly reports to the IRS. BALG attorneys can provide guidance on when FET should be collected and remitted and advise clients on the most recent IRS opinions involving FET.
Whether it involves a multi-year property tax audit, an IRS or Franchise Tax Board (FTB) audit or a state sales and use tax audit, BALG attorneys are ready to assist. Both federal and state agencies have become increasingly aggressive in their pursuit of potentially taxable income from the use of aircraft. For instance, the IRS has initiated a formal audit program targeting aircraft specifically. As a result, more taxpayers are being audited and deductions disallowed. BALG attorneys are experienced in responding to and defending all types of audits. Further, we provide services that assist in properly documenting flights in order to preemptively protect aircraft owners from future audits.
280 S. Beverly Drive, Suite 505,
Beverly Hills, CA 90212
3940 Laurel Canyon Blvd., Suite 713,
Studio City, CA 91604