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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
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