Depreciating aircraft parts, dealing with taxes, etc.

On Thu, 10 May 2007 20:03:02 -0700, Matt Barrow wrote:

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

Ah.

[...]


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".

That wouldn't surprise me at all laugh.

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.

Hmm. I thought that depreciation showed on the books as a loss even
before the depreciating asset was sold. This would have - in my
admittedly ignorant view - permitted the corporation to accumulate the
asset of the cash paid into reserves w/o showing a profit.



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.

You don't pay an hourly fee into the LLC, the money from which goes into
an account that is used to pay expenses like overhaul etc.?

[...]

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.

Hmm. So if the aircraft are not used for business - which is mostly, if
not entirely, my case - then depreciation isn't possible? But isn't the
corporation renting out that asset, thereby making it the corporation's
business (even if the people using the rental aren't using this to further
their own businesses)?

- Andrew