What You Need to Know About Non-Business Use of Your Company’s Jet
Successful businesses rely on private jets every day to get their work done efficiently, comfortably and privately.
Given the time savings, convenience, and the benefits for both your employees and clients, a private charter jet can be a wise investment for the long-term health of your business.
But before chartering or purchasing a private jet for your business, there are some important details you should understand in order to protect your employees and clients, as well as your business’ tax and legal liability.
Only certain business-related costs can be deducted from your private jet’s taxes. As such, your company’s private jet policy should cover how the jet can be used when it comes to non-business purposes.
Discover which private charter jet costs can be deducted from your company’s tax filing, how to determine business versus non-business use of the jet, and tips for producing IRS-compliant documentation for each flight.
What Costs Can be Deducted for Business Use?
All costs associated with the business use of your company’s private jet are potentially eligible for tax deductibility.
These costs may include fuel, staff, maintenance and aircraft devaluation.
The costs for any trip that the IRS sees as personal or “lavish” can’t be deducted, though. The same goes for any portion of a business trip that isn’t directly associated with the work of your company
However, many company flights may mix business and pleasure — so where’s the line?
What is Business vs. Non-Business Use?
A business trip to Los Angeles has many deductible expenses. Adding a few extra days in San Francisco for your executive to take a vacation with her husband, on the other hand, doesn’t.
Some examples of non-deductible expenses might include sending an employee’s spouse along on a business trip, stopping somewhere for recreation during a business trip, or allowing an employee use of the private jet for a vacation with the family.
The line between business and leisure is simple when an employee uses the private jet to take their family on a weekend trip.
But what about those other examples where business and pleasure are mixed? How do you know what you can and can’t deduct?
It’s all about documentation.
What Documentation is Needed for Tax Reporting?
Your company’s aircraft use policy should provide guidelines outlining rules for documenting use of a private jet.
This will allow you to properly account for every cost that can be deducted, and to provide accurate documentation to the IRS if needed.
Detailed documentation is especially helpful when your jet is used for business and non-business purposes on a single trip. The same goes if one or more of your passengers are not directly relevant to the business purpose of the trip.
Every flight made by your company ’s private jet should include the following documentation:
- Date of flight
- Point of departure and destination, as well as all stops, logged by airport code
- Flight time of each leg
- All passengers’ full names, including
titleof each (e.g., employee, client, or someone not related to direct business use, such as a spouse) — the more detail, the better
- Purpose of
tripin detail, including any non-business activity
- % of
tripthat is tax-deductible business use vs. non-business use
This documentation should be in addition to the FAA requirements for flight logs, which your piloting and maintenance crews should oversee.
How to Ensure Proper Use of a Business Jet
Your company policy sets the guidelines about the use of your jet. From here, it’s important to have a procedure in place to communicate and enforce these policies.
Hold meetings to go over the policy with relevant staff. You should train the people who’ll be overseeing allocation of plane use on the intricacies of your policy.
Make sure that every employee who may have the opportunity to use the aircraft has signed an agreement to show they’ve read and fully understand the policy.
Taking these steps will ensure you’ve done everything in your power to communicate the policy to the employee, and that they’ve shown an understanding of the rules put in place.
This could be important in the case that an employee breaks from company guidelines, resulting in a potential legal or tax liability for your company.
Consult with an expert familiar with aircraft accounting and tax laws when specifying the non-business use aspect of your company policy.
But using a private jet entails more than just tax responsibilities. There’s staffing, maintenance, and safety to consider.
Not to mention finding the right jet that makes sense for your company. And then you’ve got to find somewhere to store it.
It can seem like a lot, and it’s not like you want to make taking care of all the details of your company’s private jet your new full-time job. You’ve got your business to run.
That’s exactly why aircraft management companies have been playing increasingly larger roles in the private jet industry.
At Mountain Aviation, our team of experienced professionals can handle every step of the process — from finding and acquiring a new jet to staffing, maintaining, storing, and flying the one you already own.
Plus, when you aren’t using the aircraft, we can manage the selling of seats for charter flights on your jet to offset the cost of ownership, making the idea of owning your own plane all the more lucrative.
And Mountain Aviation has a long track record of safety in the private sector.
We’ve achieved the coveted ARG/US Platinum Rating. This prestigious rating covers every facet of Mountain Aviation’s flight operations and is one of the highest ratings for “safety and excellence in service” the aircraft industry can bestow.
When it comes to getting a private jet for your company, it helps to have experience on your side.
Read our ultimate guide for buying a private jet for your business >