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Protect Aircraft-Leasing Tax Deductions from the IRS Hobby Loss Rule

August 29, 2024

“Protect Aircraft-Leasing Tax Deductions
from the IRS Hobby Loss Rule”

To get my complete article
with all the details…

Not everyone can reach into their pocket and pull out enough cash to pay for an airplane.

That’s why you should consider paying for your plane through a leasing arrangement.

When you go the leasing route, you can:

  • Defray the costs of ownership by leasing out to a third-party charter company
  • Defer sales and use tax by purchasing an aircraft and leasing it back to your company
  • Own the aircraft in a separate entity for increased liability protection

Offsetting these benefits, however, are the nasty “hobby loss rules” that can both limit the upsides of your leasing and cause you to pay plenty of unfair taxes.

The hobby loss rule explained.

The hobby loss rule is the silver bullet that the IRS can use to kill the deductibility of your business-use aircraft.

Let’s get into the weeds for a moment …

If the IRS determines that your aircraft leasing arrangement is not a business but a hobby, you will have this undesirable result:

  • Tax on the gross income from aircraft leasing
  • Zero (or close to zero) deductions for depreciation and operating expenses
  • And more

That can really hurt! Think of it: tax on the gross income and no deductions allowed. So what can you do to take the sting out of the hobby tax rule?

CLICK HERE to read my completely new article titled:

“Protect Aircraft-Leasing Tax Deductions
from the IRS Hobby Loss Rule”

Filed Under: Airplane, Choice of entity, Filing tips, Hobbies, Passive income and losses, Rental Properties, Tax Planning

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