PERSONAL USE OF CORPORATE AIRCRAFT On occasion a company’s aircraft may be used for non-business use. Of course this is purely a hypothetical situation because as we all know company aircraft are always used for business. But in case you ever encounter this situation, the IRS has rules on how to handle it. Brillouin Science And Information Theory Pdf.
Use the secure, online application to secure your exhibit space at NBAA Regional Forums. Introduction: Non-Business Use of Company. NBAA's Personal Use of Business Aircraft Handbook is the basis for this. Non-Business Use of Company Aircraft. Lorem ipsum dolor sit amet, consetetur sadipscing elitr, sed diam nonumy eirmod tempor invidunt ut labore et dolore magna aliquyam erat, sed diam voluptua. PERSONAL USE OF CORPORATE AIRCRAFT. Or for any other purpose not related to the personal business of the employee. 1 NBAA publishes these twice a year.
These rules are intended to be used by the taxpayer to determine when transportation is taxable and the fair market value. Once the value has been determined the dollar amount can either be considered additional gross income, or the employee can pay that amount, according the IRS. However, the Federal Aviation Regulations (FAR 91.501(b)(5)) strictly prohibit the reimbursement for personal transportation on a corporate aircraft. (FAA Chief Counsel Opinion 8/93). So to maintain compliance with both the FAA and the IRS the value of the transportation should be added to the employee’s income.
The IRSs method of calculating a fair valuation on non-business use of an employer provided aircraft is the “Noncommercial Flight Valuation Rule” (IRC 1.61-21(g)), otherwise known as the “SIFL” rule or the “Charter Valuation Rule”. This rule may be used to value flights on all types of aircraft, including helicopters, as well as international flights. This rule is also used to value flights on charter aircraft as long as the air transportation is not sold on a per seat basis. In general, if an employee is provided a flight on a company aircraft, the flight is potentially taxable to the employee. This also applies to non-employee guests or family members of an employee whose flight value will be imputed on the income of the employee who invited (authorized) them on the aircraft. But take note, the value of a flight for an individual who is less than two years of age is deemed to always be zero.
The definition of a flight is as follows: -The distance in statute miles; -From where the individual boards the aircraft to where the individual deplanes; -On a passenger by passenger basis; and -With a roundtrip consisting of 2 flights. In addition, mileage attributable to an intermediate stop will not be considered. If a landing is required due to weather conditions, refueling, or other services related to the aircraft, or for any other purpose not related to the personal business of the employee, family member or guest, that landing is considered and intermediate stop. This rule applies to the personal flights on board a company aircraft, but sometimes these flights can be a combination of both personal and business. What do you do now? Business Statistics Levine 6th Pdf Creator. Well, as you have probably guessed the IRS has rules for that too.
If the employee’s flight is primarily for the employers business, the employee must include in income the excess of value of the trip if no personal travel had occurred. For example, value of the total trip, minus the cost of the business flights, the remainder is the amount to be added to the employee’s income. If the employee’s flight is primarily for personal the value to be added to the employee’s income is the value of the personal legs as if no business travel had occurred. A very key element involved when calculating the value of personal use of a company aircraft is whether an employee is classified as a “control” employee or a “non-control” employee.
A non-control employee is simply an employee who is not a control employee. However, a control employee is defined as: a) A board member or shareholder (appointed or confirmed), or elected officer of the employer, limited to the lesser of - One percent of all employees, or 10 employees; B) An individual who is among the top 1 percent most highly paid employees of the employer, limited to a maximum of 50; C) An individual who owns 5 percent or greater equity, capital or profits in the employer; or D) A director of the employer. (IRC 1.61-21(g)(8)) This is just the basis for making the determination and since these rules are complex and knowledge of the complete corporate structure is needed to make a determination of which employees are control employees, it is suggested that you have your attorneys determine who, within the corporate structure are control employees, and have this list updated regularly. In addition, an employee is defined as: 1) an individual who is employed by the employer, 2) an individual formerly employed by the employer who separated by reason of retirement or disability; or 3) a widow or widower of 1 or 2. Also, any use by a spouse, dependent children or guest will be treated as use by that employee. What that really means is that if the spouse of an employee is on board the aircraft, the value of the flight would be the same as if the employee had been on the aircraft for personal use.