Homebuilt tax writeoff

So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?

wrote:
So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?


None of the above.


First, the writeoff is only for business expenses. Are you going to
use it for business purposes.

But notwithstanding that, the bonus depreciation requires you to
actually PUT THE EQUIPMENT INTO SERVICE before the cut off date.

wrote in message
oups.com...
So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?


Business use of a homebuilt is rather limited, so the rest of the questions
are moot. Still, assuming you could find a business use, it is when the
airplane is placed in service.

On Fri, 24 Dec 2004 08:05:11 -0800, "C J Campbell"
wrote:

wrote in message
roups.com...
So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?

Business use of a homebuilt is rather limited, so the rest of the questions
are moot. Still, assuming you could find a business use, it is when the
airplane is placed in service.

Have to admit I've wondered whether I could write off the cost of a kit if I
wrote a series of articles about its construction. The amount one would make on
the articles is probably quite a bit less than the kit and engine would cost,
but one could avoid IRS trouble with careful planning.

The IRS wants to see a profit in three out of five years. Buy the kit in year
one and take a loss. Claim a profit from the articles written in years two and
three. Buy the engine in year four and take a loss. Claim a profit in year
five from the completion articles, and more profit in year six from articles
related to test-flying.

That is, if you can get any flying in while playing a seven-year game of
rock-hockey at Leavenworth for tax evasion. :-)

Ron Wanttaja

RobertR237 wrote:


wrote in message
groups.com...

So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?


Business use of a homebuilt is rather limited, so the rest of the questions
are moot. Still, assuming you could find a business use, it is when the
airplane is placed in service.



You could write it off for business if you were using it to commute on business
but look for a hardnosed audit.

What do you mean, commute on business? If you mean commuting to work,
then that doesn't count. If you meaning flying for business purposes,
that isn't called commuting.

Matt

I am self employed and from all these comments, the least I see is
that I can use it for business transportation - just like travel
expense deduction on a car. If I claim no more deduction than
equivalent airlines expenses I don't see how IRS would object. I use
about 5gal/hr at 125kts IAS in my SQ2000 canard which can cruise even
faster at higher altitudes. Considering straight line advantage over
autos and waiting period at airports the fuel expenses are as good
compared to car and cheaper than airlines - and I already got the
bird.
-----------------------------------------
SQ2000 canard: http://www.abri.com/sq2000

Ron Wanttaja wrote:
On Fri, 24 Dec 2004 08:05:11 -0800, "C J Campbell"
wrote:
.......
Have to admit I've wondered whether I could write off the cost of a
kit if I
wrote a series of articles about its construction. The amount one
would make on
the articles is probably quite a bit less than the kit and engine
would cost,
but one could avoid IRS trouble with careful planning.

The IRS wants to see a profit in three out of five years. Buy the
kit in year
one and take a loss. Claim a profit from the articles written in
years two and
three. Buy the engine in year four and take a loss. Claim a profit
in year
five from the completion articles, and more profit in year six from
articles
related to test-flying.

That is, if you can get any flying in while playing a seven-year game
of
rock-hockey at Leavenworth for tax evasion. :-)

Ron Wanttaja

So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?

If you are talking about the accelerated depreciation deal, you have
to purchase or upgrade an aircraft to the tune of $200K before Jan 1,
04 and have it in service during '05. Can you use an experimental
aircraft commercially?

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"Ron Wanttaja" wrote in message
...

The IRS wants to see a profit in three out of five years.

This is no longer true. The IRS lost a series of court cases on this one,
most notably because huge corporations such as Amazon.com, airlines, and
investment real estate would have been treated as hobby losses. Going after
only small businesses was unconstitutional under the equal protection
clause. Now the IRS uses other tests to determine if an entity is a
business.

Basically, you must demonstrate that the entity has "the trappings" of a
business and is operated like a business; that is, the business should have
its own bank accounts, pay its employees, charge for its services, have a
business address, be registered as a business under local laws, pay business
taxes, not mix business expenses with personal expenses, etc.

So, yes. If you bought a kit for the purpose of writing a book about
assembling it, the kit would probably be deductible if you actually wrote
and published a book and did all the other stuff. You should get a good tax
lawyer or accountant to set it up for you and make sure all your t's and i's
are crossed and dotted.

"Don Hammer" wrote in message
...

So much has been said about tax writeoff for certified new plane
purchases.
Any possibility for homebuilts? When the kit is purchased? When
completed
and registered?

If you are talking about the accelerated depreciation deal, you have
to purchase or upgrade an aircraft to the tune of $200K before Jan 1,
04 and have it in service during '05. Can you use an experimental
aircraft commercially?

In theory. Some other countries allow it, for example. It is also fairly
well accepted to use ultralights for commercial photography and filmmaking.
But the exceptions to the rule are few and far between.

wrote:

I am self employed and from all these comments, the least I see is
that I can use it for business transportation - just like travel
expense deduction on a car. If I claim no more deduction than
equivalent airlines expenses I don't see how IRS would object. I use
about 5gal/hr at 125kts IAS in my SQ2000 canard which can cruise even
faster at higher altitudes. Considering straight line advantage over
autos and waiting period at airports the fuel expenses are as good
compared to car and cheaper than airlines - and I already got the
bird.

Last I knew, you had to use actual expenses, not an "equivalent"
expense. The only exception is road vehicles which have the mileage
based deduction to simplify things. I don't recall ever reading a
similar arrangement for aircraft so I believe you would have to track
actual expenses pro rated to your business use vs. personal use.
Definitely a question to pose to a good tax accountant or lawyer before
filing your return.


Matt