800.999.1109 - Aviation Insurance & Risk Management Magazine
800.999.1109 - Aviation Insurance & Risk Management Magazine 800.999.1109 - Aviation Insurance & Risk Management Magazine
Written policies and procedures – When the business’s activities are thought out in advance, procedures can be put into place to minimize risk and loss. Th e standardization of doing a job the same way each time improves quality and consistency and reduces the risk of an error or omission. Employee training – After the policies are written, the employees must be trained – both initially and on a recurrent basis – to properly execute their duties and responsibilities. Knowledgeable, competent, and profi cient workers are key to a quality product. Th is training should be documented and records should be available showing when and how each employee was trained. Th ese records can demonstrate regulatory compliance, refute claims of negligence, and lower insurance premiums. Th ere are many issues facing both new and established aviation maintenance business owners. A well thoughtout risk management plan is as important to a business’s success as the appropriate licenses and tools. Plan your risk management and insurance strategy in advance and Specializing In TBM 700/850 Training on purpose. Buy the appropriate insurance products at adequate limits. Take extreme care in everything that you do, but be aware that aviation accidents and incidents can put your planning to the test at any time. � TSI Has Thousands Of Hours Flying And Teaching In TBM 700/850 Aircraft Transition Training Recurrent Training Mentor Pilot Services Advanced Technology Flight Deck Training Pro Pilot Services
Louis M. Meiners, Jr. CPA, JD Louis M. Meiners, Jr. is an attorney and CPA who serves as president of Advocate Aircraft Taxation Co. Advocate's practice is limited to serving the needs of owners and operators of aircraft. Services include aircraft operational analysis, sales and use tax management on aircraft acquisitions, income tax planning, federal excise tax planning, and representation before taxing authorities. loum@advocatetax.com 888.325.1942 Jonathan Levy, JD Jonathan Levy is the Legal Director of Advocate Consulting Legal Group, PLLC. In this capacity, Jonathan assists aircraft owners across the country with tax planning and Federal Aviation Administration (FAA) compliance matters and manages the firm’s training program. He is admitted to practice law in Tennessee and Florida, as well as before the United States District Court of the Third Circuit and the United States Tax Court. jonl@advocatetax.com 888.325.1942 This article is designed to provide information of general interest to the public and is not intended to offer specific legal advice. You should consult Advocate Aircraft Taxation Company or your tax and aviation advisor if you have a matter requiring attention. How to Jointly Own an Aircraft By Louis M. Meiners, Jr. CPA, JD and Jonathan Levy, JD FORM OF OWNERSHIP IMPACTS INCOME TAX, SALES TAX, LIABILITY, AND FAA REGULATORY REQUIREMENTS Tax and regulatory authorities generally provide wide latitude in structuring joint ownership of aircraft. Generally, co-owners have the opportunity to choose between a number of alternatives for the manner of ownership and operation. Th eir ultimate choice should be guided not only by tax outcomes but also by liability and regulatory considerations. Th e most common ways to jointly own aircraft are co-ownership, partnership, corporate ownership, and limited liability company ownership. Co-ownership refers to listing multiple owners on the registration fi led with the FAA in Oklahoma City. Partnership refers to ownership governed by a partnership instrument or under a state’s Uniform Partnership Act. Corporate ownership can be through either a C corporation, a stand-alone taxpayer, or an S corporation, which has fl ow-through tax characteristics similar to a partnership. A limited liability company is a relatively recent hybrid method of ownership that combines both corporate and partnership characteristics. If an aircraft is being owned and operated by a group of individuals strictly for personal use, the form of co-ownership has little impact on the income tax consequences. Generally, operations will not result in deductions, depreciation will not be allowed, and an ultimate loss on disposition will not result in a tax deduction. If the aircraft is ultimately sold at a profi t, it will be subject to capital gains tax to the extent that ultimate proceeds exceed both the original cost and improvements. When one or more users of the aircraft intend to devote it to business use, the income tax consequences of the form of co-ownership become critical. Co-owners of business property are generally taxed as partners in a partnership, regardless of whether or not they have a formal partnership agreement. Like partners operating under a formal agreement, co-owners may generally allocate income or deductions for income tax purposes as they see fi t, provided that such tax allocations accord with the economic deal struck between the partners. Generally stated, the partnership rules of Subchapter K of the Internal Revenue Code provide signifi cant fl exibility—although this is limited by certain anti-abuse rules which can apply Fall 2009 | 27
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Written policies and procedures – When the business’s<br />
activities are thought out in advance, procedures can<br />
be put into place to minimize risk and loss. Th e<br />
standardization of doing a job the same way each time<br />
improves quality and consistency and reduces the risk<br />
of an error or omission.<br />
Employee training – After the policies are written,<br />
the employees must be trained – both initially and<br />
on a recurrent basis – to properly execute their duties<br />
and responsibilities. Knowledgeable, competent, and<br />
profi cient workers are key to a quality product. Th is<br />
training should be documented and records should be<br />
available showing when and how each employee was<br />
trained. Th ese records can demonstrate regulatory<br />
compliance, refute claims of negligence, and lower<br />
insurance premiums.<br />
Th ere are many issues facing both new and established<br />
aviation maintenance business owners. A well thoughtout<br />
risk management plan is as important to a business’s<br />
success as the appropriate licenses and tools. Plan your<br />
risk management and insurance strategy in advance and<br />
Specializing In TBM 700/850 Training<br />
on purpose. Buy the appropriate insurance products<br />
at adequate limits. Take extreme care in everything<br />
that you do, but be aware that aviation accidents and<br />
incidents can put your planning to the test at any time.<br />
�<br />
TSI Has Thousands Of Hours Flying And Teaching In TBM 700/850 Aircraft<br />
Transition Training Recurrent Training Mentor Pilot Services<br />
Advanced Technology Flight Deck Training Pro Pilot Services
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