Homebuilt tax writeoff

"C J Campbell" wrote:

OK, I think we are on the same page, then.
There is nothing preventing Ron
from setting up a "C" corp.

A C Corp is of no tax benefit for an activity which nets out losses
over the years. That's why Congress didn't include them in the hobby
loss rules. Nobody ever did it for something which could be viewed as
a hobby, nor ever would.

Equal protection arguments do require that a law
or regulation be applied to everyone the same way.

Cite a case where IRS lost on those grounds, other than a criminal
case, and rarely even there.

Thus, if profitability 3 out of 5 years presumes a business for
profit,
then it has to be applied to everyone that way unless some exception
is spelled out in the code, which there isn't.

Because there needn't be. Your premise doesn't describe real-life
litigation on this issue, nor does it reflect the practical effect of
Regulations under section 183.

Fred F.

TaxSrv wrote:

"C J Campbell" wrote:

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.



I've been in tax practice for 40 yrs now. Sorry, but all of the above
is a complete fabrication.

Fred F.


What is the current reality then?

Matt

C J Campbell wrote:

"Mark Smith" wrote in message
...

Never been audited, but don't deduct stupid stuff that gets a flag on my
returns either.


If you never get audited, then a good argument can be made that you are way
too conservative.

Yes, that was my thought also. I haven't been audited yet either, but
I'm not shy about taking deductions that I believe I'm entitled to take.
I get a couple of "flags" every year from my tax prep software that
say I'm taking deductions that are well above the national average in a
couple of categories, however, I believe they are legitmate based on my
understanding of the tax law so I take them.


Matt

RobertR237 wrote:

wrote in message
legroups.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 know of several people who "commute" to work using their planes. It doesn't
have to mean that you have an office job that you commute to, I could have used
a plane to commute to work in Dallas from Houston for the last years and could
have written off the expenses as ligitimate business expense since the distance
is over the 50 mile limit.

What 50 mile limit? I've never read or heard about any limit for
commuting to work. Can you reference the tax code section that allows this?

Matt

C J Campbell wrote:

"TaxSrv" wrote in message
...

"C J Campbell" wrote:

...

I am not sure what you are claiming is a fabrication. Are you
saying that

Amazon.com and real estate tax shelters would not fail the 3 out of

5 test?

....

Pure summary, assuming all this is inappropriate for the NG. Hobby
loss rules do not apply to "C" corporations like Amazon or the
airlines. "Equal protection" arguments don't apply to noncriminal tax
issues, as Congress can allow a tax benefit, or deny a benefit, for
makers of widgets, but not gadgets. It can creep into tax-exempt org
issues, though. The practical aspects of real-life hobby loss issues
tend to render the 3/5 test moot. Recent developments in the shift of
burden of proof in Tax Court and reimbursement of representational
fees renders even the "rebuttable presumption" rather moot. IOW, it's
all a pure factual question, whether the losing, alleged business
passes the basic sniff test for hobbies.


Unless you are an IRS auditor, of course....

Formerly, but mere Auditor hell. :-) Many yrs in technical,
managerial, and training matters; civil and criminal litigation.


OK, I think we are on the same page, then. There is nothing preventing Ron
from setting up a "C" corp. Equal protection arguments do require that a law
or regulation be applied to everyone the same way. Thus, if profitability 3
out of 5 years presumes a business for profit, then it has to be applied to
everyone that way unless some exception is spelled out in the code, which
there isn't. Thus, the law can apply to widget makers or gadget makers, but
it applies equally to both unless Congress specifically says it applies only
to one or the other.

And my point is that the 3/5 test is irrelevant for almost all practical
purposes.

My own philosophy is: if there were no taxes would somebody do this as a
business? If yes, then the IRS is unlikely to have any problem with it,
either.

My main point is that neither Ron nor anybody else should base a business
decision simply on whether it passes some IRS rule which is probably
irrelevant anyway. You should make business decisions on the basis of
whether they are good business. If you do that then the IRS is nearly always
going to fall in line with what you want to do.

If you truly make good business decisions, then you'll likely make a
profit and won't have to worry about this issue! :-)

Matt

On Sat, 25 Dec 2004 22:16:22 -0800, "C J Campbell"
wrote:


"Ron Wanttaja" wrote in message
.. .

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

When I was in business you had to be careful about write offs. They
are a double edged sword.

If you write it off you have to pay taxes on the income from selling
it.

Roger Halstead (K8RI & ARRL life member)
(N833R, S# CD-2 Worlds oldest Debonair)
www.rogerhalstead.com

RobertR237 wrote:

wrote in message
glegroups.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 know of several people who "commute" to work using their planes. It
doesn't
have to mean that you have an office job that you commute to, I could have
used
a plane to commute to work in Dallas from Houston for the last years and
could
have written off the expenses as ligitimate business expense since the
distance
is over the 50 mile limit.

What 50 mile limit? I've never read or heard about any limit for
commuting to work. Can you reference the tax code section that allows this?

Matt

Sorry, you are right, I was confusing a moving expense limit.


Bob Reed
www.kisbuild.r-a-reed-assoc.com (KIS Builders Site)
KIS Cruiser in progress...Slow but steady progress....

"Ladies and Gentlemen, take my advice,
pull down your pants and Slide on the Ice!"
(M.A.S.H. Sidney Freedman)

RobertR237 wrote:

RobertR237 wrote:


wrote in message
oglegroups.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 know of several people who "commute" to work using their planes. It

doesn't

have to mean that you have an office job that you commute to, I could have

used

a plane to commute to work in Dallas from Houston for the last years and

could

have written off the expenses as ligitimate business expense since the

distance

is over the 50 mile limit.

What 50 mile limit? I've never read or heard about any limit for
commuting to work. Can you reference the tax code section that allows this?

Matt


Sorry, you are right, I was confusing a moving expense limit.

Bummer. You had me salivating there for a minute! :-)
I was hoping there was some deep, dark exception in the tax code that I
wasn't aware of...

Matt