February 13, 2015
The importance of an aviation attorney
There are lots of legal issues every aircraft owner or potential owner may face at one point or the other. To solve these issues, there is often need to seek the help of an aviation lawyer. Trying to navigate the murky waters of aviation law on your own may lead to unnecessary payment of taxes, violation of federal laws and getting the short end of the stick in your transactions.
Why you need a good airplane attorney
Setting up the right way
Owning and operation of an aircraft is a great thing but it is important to put together the right team from the start. The right team must involve an aviation attorney in your process. This will ensure you have proper understanding of what you are getting into right from the start. Ignoring this opens your business up to regular investigations from regulatory bodies and heavy taxes and fines.
IRS and State Tax Issues
For the average aircraft owner, federal income tax and the deduction of other such expenses are a major concern. Owning an aircraft has some tax benefits but very few owners understand issues such as limitations on deductions as a result of personal use and passive ownership of structures. Another concern is the assessment of the federal excise tax on commercial air transportation services. Accidental engagement in operations that can be deemed commercial by the IRS can bring about a big and unplanned FET bill. Here are answers to some aviation tax questions.
Again, different states have different forms of taxes on the ownership and use of aircraft around their jurisdiction. However, the taxes go behind where you take delivery or your state of incorporation. One major consideration in the taxation is where the plane will be based. Since there is significant tax revenue to claim, all states have actively ramped up activity in the area of finding airplanes hangared within their jurisdiction. This has led to an increase in the number of aircraft owners being hit with large, unexpected tax bills, as well as penalties and interest.
All this accidental expenditure can be avoided by seeking the services of a quality aviation attorney, like Slack & Davis.
To properly mitigate risk, the aircraft owner needs to make sure that the operating structure is set up correctly under the appropriate FAR rules. The aircraft owner must be running a safe and professional operation and their structure must be fully disclosed to the insurance carrier so as to secure the right policy with suitable liability limits. It takes a competent aviation specialist to confirm that an airline is properly managing risk.
Getting the right financing is a great way to put cash into business investments that are higher earning, transfer risk to the financier and manage cash flow. However, aircraft financing is a niche that is unique and has a wide scope. Lenders, for example, are worried about the loss in value of their collateral. They therefore try to put that risk on you while at the same time attempting to limit increasingly real threats of loss or confiscation outside the country. To obtain the best pricing and properly customised financing terms, therefore, you need to understand the limitations and dynamics among lenders in this industry. An attorney can help.