Nbaa Personal Use Of Business Aircraft Handbook

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NBAA is pleased to announce its call for nominations for the 2018 NBAA Dr. Tony Kern Professionalism in Aviation Award. Nominations are due to NBAA by July 16, 2018. NBAA Business Aircraft Use Policy Guide – formatted version (221 KB, PDF) The NBAA Business Aircraft Use Policy Guide is an essential resource for all businesses with an aircraft. This publication is available to NBAA members only. If you’re not already a member, consider joining NBAA.

I have been a CPA for over 30 years focusing on taxation. I have extensive experience with partnerships, real estate and high net worth individuals. My ideology can be summarized at least metaphorically by this quote: 'I have a total irreverence for anything connected with society except that which makes the roads safer, the beer stronger, the food cheaper and the old men and old women warmer in the winter and happier in the summer.'

- Brendan Behan Nobody I work for has any responsibility for what goes into this blog and you should make no inference that they approve of it or even have read it. The author is a Forbes contributor. The opinions expressed are those of the writer. Update: I have added a comment from an expert on the process behind this ruling. 1031 is one of the few Internal Revenue Code sections, like 401(k) and 501(c)(3), that have worked their way into the vocabulary of people who are not tax geeks. Code Section 1031 provides that when property used in a trade or business or held for investment is exchanged for property of like-kind that will be used in a trade or business or held for investment will only be recognized to the extent that property not of like kind (typically money) is received. Like-kind exchanges are very common with real estate but have a much broader application.

A logo sits on the side of a Learjet 45XR aircraft, manufactured by Bombardier Inc., on the second day of the Farnborough International Air Show in Farnborough, U.K., on Tuesday, July 10, 2012. The Farnborough International Air Show runs from July 9-15. Photographer: Matthew Lloyd/Bloomberg What Is It Being Used For? One of the tricky things about 1031 is the “trade or business or held for investment requirement” – let’s call it the “held for” requirement for short. Gives a safe harbor for residences providing that the IRS will not challenge a residence as a valid 1031 relinquished property or target if it is rented for at least 14 days in the year before or, in the case of the target, after the exchange and not used personally for more than the greater of 14 days or 10 percent of the number of days during the period. All Or Nothing But what about airplanes?

Well now we have we. The CCA starts off with a clever idea Is an aircraft owned by an individual that is exchanged for another aircraft in a transaction intended to qualify as a like-kind exchange under § 1031 of the Internal Revenue Code, considered to be two assets, one held for productive use in a trade or business or investment and one held for personal use, if the individual used the exchanged airplane for both personal purposes and for productive use in a trade or business or investment? It’s kind of amusing to think about swapping the personal part of the aircraft for the business part of the aircraft. Actually sorting that out gives me a headache, so I am glad to say that the Chief Counsel’s office does not approve of it. For purposes of whether § 1031 applies to an airplane exchange, the exchanged airplane is considered one property that is either held for productive use in a trade or business of for investment, or that is held for personal use. There is a pretty long discussion of why mainly focusing on the language in the Code implying an all or nothing approach and also mentioning that the Service passed on the opportunity to bifurcate rental properties when it issued Rev Proc 2008-16.

In summary, there is no legal support for treating the relinquished aircraft as two properties for purposes of § 1031. In addition, the position that property either meets or fails to meet the “held for” requirement of § 1031(a)(1) and should not be treated as two properties is consistent with the safe harbor published in Rev.

Consequently, the relinquished aircraft should be treated as one property that either meets “the held” for requirement of § 1031(a)(1) or fails to meet the requirement. The whole plane either qualifies or does not qualify, which brings on the next question. If the airplane is treated as one property for § 1031 purposes and, in the taxable year the relinquished aircraft was exchanged, only X percent of the aircraft’s flights were business or investment related, is the relinquished aircraft property that is held for productive use in a trade or business or for investment? That part is rather frustrating, since we don’t know what “only X” is. The indication is that it is pretty well under 50%. I’m thinking the field agents were not real happy with the chief counsel’s answer, since they will now get to aggravate the taxpayer with even more questions.