A aviation & planes forum. AviationBanter

If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below.

Go Back   Home » AviationBanter forum » rec.aviation newsgroups » Owning
Site Map Home Register Authors List Search Today's Posts Mark Forums Read Web Partners

Depreciating aircraft parts, dealing with taxes, etc.



 
 
Thread Tools Display Modes
Prev Previous Post   Next Post Next
  #4  
Old May 11th 07, 04:03 AM posted to rec.aviation.owning
Matt Barrow[_4_]
external usenet poster
 
Posts: 1,119
Default Depreciating aircraft parts, dealing with taxes, etc.


"Andrew Gideon" wrote in message
news
On Thu, 10 May 2007 16:14:30 -0700, Matt Barrow wrote:

IIUC, it should be set up as a reserve/expense account, not as income to
the corporation. The only income to the corporation should be the
management fees (??)


I guess I'm confused about how payments into the company, to be used in
some future year, are tracked as an expense.


In accounting they're called a "Pre-paid Expense"

[...]


It sounds like you're trying to depreciate components, rather than the
entire aircraft, on an hourly basis.


That's what I was thinking.


It sounds like you don't quite understand "Depreciation". Depreciation is a
reduction in value, there is not periodic cash flow. The only cash
DIFFERENCE is when you sell the asset (in this case, an aircraft) and the
difference is in how much less you get for it than you GAVE for it.


I don't think that's a good idea.
That takes much more work for your accountant.


That's a good point.

[...]

Are you a "partner" to the corporation, or is it third party, such as a
partnership or lease back?


I'm one of the "shareholders", except that it's a corporation that doesn't
issue shares.


(My explanation here is probably NOT technically correct) My company
(LLC) is the registered owner of my aircraft. We deduct expenses as
incurred and take depreciation and make an entry in "Reserves" on an
hourly basis for such things as recurring maintenance and overhaul.


So you depreciate the value of the entire aircraft by the reserve amount
each hour?


No, the reserve is for periodic maintenance, such as overhauls, annuals,
etc. For depreciation, it's strictly an accounting/tax entry.

And then, at engine overhaul time, you increase the value of
the airplane by the value of the engine?


Possibly. Some aircraft appreciate in value, some depreciate.


The LLC then "charges"me for any personal use I make of the aircraft. I
then declare that as personal income, just as when I draw from our cash
accounts for "personal income - cash".


I don't follow this paragraph at all, I'm afraid. If you're paying into
the LLC, how is that personal income?


I'm not paying into the LLC, all company revenue flows INTO the LLC and the
LLC holds certain assets, one of which is my aircraft.

At the same time, all expenses are paid by the LLC, such as construction
costs, fees, materials, aircraft expenses, etc., and cash that we withdraw
as our income. That way, the value of the company keeps growing nad does not
require "leverage". We've done some small projects that we capitalized (ie,
paid for) ourselves, rather than using banks for cost of construction loans.

If you are not using your aircraft for business, you can't depreciate your
share of it. If you are, you can only depreciate that portion that you use
it for business, but you must use it for business 50% of the hours you use
it in total.

Such are the benefits of operating as a corporate entity, rather than as an
individual: you pay expenses out of pre-tax dollars rather than out of
after-tax $$.


--
Matt Barrow
Performace Homes, LLC.
Colorado Springs, CO


 




Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Forum Jump

Similar Threads
Thread Thread Starter Forum Replies Last Post
Discussion on dealing with future ADIZ Incursions by light A/C Hank Rausch Piloting 47 May 14th 05 02:33 PM
Book Review: "Dirty Dealing: Drug Smuggling on the Mexican Border",et al; Cartwright Paul Piloting 0 January 5th 05 06:36 PM
FS: Aircraft Instruments Parts Avionics Warbird Parts Bill Berle Home Built 0 January 10th 04 02:20 AM
FS: Aircraft Instruments Parts Avionics Warbird Parts Bill Berle Aviation Marketplace 0 January 10th 04 02:20 AM
How to avoid Aircraft Ad Velorem taxes........... ArtP Owning 6 August 27th 03 08:37 PM


All times are GMT +1. The time now is 05:03 AM.


Powered by vBulletin® Version 3.6.4
Copyright ©2000 - 2025, Jelsoft Enterprises Ltd.
Copyright ©2004-2025 AviationBanter.
The comments are property of their posters.