PJP 030 | Applying Business Aircraft Depreciation w/ Ryan DeMoor (Part 2 of 2)

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Owners and operators of business aviation expect the financials of their private aircraft to be aligned with IRS, FAA, and possibly SEC rules.  But, for directors and chief pilots… meeting this expectation is easier said than done.

To help us today, Ryan DeMoor joins the show to continue sharing his expertise on business aircraft tax depreciation, a key element in the balance sheet of business aircraft. In episode 29, we defined depreciation.  In this episode, we'll talk more technical, but the takeaway will be easy to implement right away.

Financial Analyst Expertise

Ryan is an expert in business aviation operational finance. He’s an MBA, CAM, and holds an ATP… having spent 5 years in FAR 121 airline flight operations, another 5 years in FAR 135 on demand operations including roles as pilot and financial analyst, and has spent the last 2.5 years as a dedicated financial analyst with one of the largest and most complex private FAR 91 operations in the world.

He’s also a long-time friend, professionally and personally.

Applying Business Aircraft Depreciation

Many variables go into properly accounting for tax depreciation in a business airplanes balance sheet. In this episode we cover three high-level issues to help us better speak the tax language with our tax team, including:

Asset Classes:  The IRS and FAA define commercial operations differently, and this will affect the asset class a business aircraft falls into for IRS compliance.

Bonus Depreciation:  What is it? Who gets to take it? Why would it matter to an owner or operator?

Testing:  This is how aviation tax professionals and the IRS will determine precisely what/when/how depreciation applies.  Ryan overviews commercial testing, international testing, and qualified business use testing… including a common example of how easy it is to fail one of these tests by accident.

Tax Depreciation Takeaway

This stuff isn't easy. And as a business aviation professional, director, chief pilot, or department manager, we're expected to get it right. But, how?

Use experts. The people funding business aircraft have legal, tax, accounting, and other professionals who know how to properly apply depreciation.

Our job then is to lead the communication among these various offices. That's today's biggest takeaway… leading here, facilitating information flow among the experts, can help us utilize tax depreciation intelligently, strategically, and legally to increase value and reduce risk for our owner and/or operator.

Mentioned In The Show

Ryan DeMoor, CAM, MBA – LinkedIn

See Ryan in September's NBAA Business Aviation Insider

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