Airplane Ownership Legal Structure and Accounting

[Robert VanZee]

I am a real estate investor in Grand Rapids, MI and Anna Maria Island FL, and I am looking into purchasing a small airplane for both personal and business use. I currently have an LLC that holds 5 properties in MI and one in FL. Does anyone have advice on how to structure the aircraft purchase? Should I start a new LLC to hold the aircraft or just use my current LLC? How do I best account for the aircraft costs?

[Jay Hinrichs]

as a aircraft owner pilot.  I can tell you what we did.. I had a partner.  we bought a Cirrus sr 22 brand new in 04..

we created an LLC that owned that aircraft.. the hanger we bought was in a different LLC .. pretty straight forward.

your risk of audit goes up if you claim it for business like we did.. I got audited.. its pretty easy to document.

your log book is a great source.. it has your departure airport were you went etc etc.. I would put in my remarks section of the log book.. just a simple note went to see my project in Tillamook or went to see client in Spokane or Salt Lake whatever it was.. We also wrote off training flights as education necessities..  the auditor did not ding us.

one thing to keep in mind as well.. was when I bought it brand new aircraft had the section 179 deduction.. so we paid 440k for it and wrote off 90% year one.  So those will get looked at.. check with used aircraft its different.. we subsequently bought another sr 22 for about 250k it was used so I don't think we go the big write off on that one.

Keep in mind though just like with real estate  depreciation recapture is a BEOTCH.. 

Insurance is a big deal..   there are aviation attorneys that specialize in set up and of course aviation insurance brokers. 

One thing I like to suggest to anyone taking to the air as a private pilot  even if you don't own a Cirrus.. Join the Cirrus owners and pilots association its about 60.00 a year it has the most robust  BP style forum out there.. Tons of very very experienced pilots who are more than willing to help with questions from newer pilots .. most of the m are self made and very successful in business and so there is some great networking behind the scenes a lot like BP>. 

And of course if you can swing it I would buy a Cirrus you can get a decent SR 20 in the low 100s  the parachute has saved over 150 lives.. its real.. I would not fly any other non turbine airplane.. 

most used Cessna's etc are all 50s and 60s tech.  Cirrus is todays tech..  big difference.. 

if your looking for something else. I have owned a few pipers and for beginner pilot the Piper archer is a very good deal and forgiving airplane..  however the cirrus on basically the same GPH will do 150 knots true the archer 110  LOL I like speed.. my 22 was 170 knots true LOP  very economical for aviation standards.. 

as with anything aviation stay up to date.. train often .. we live in the best country in the world to be a private pilot.. its an awesome thing  it really is.. and huge time machine.

you must become an expert at weather though.. and always remember you don't really need to be there.. when in doubt hang out .