Tax Question Regarding CFI flying for free
 

Here is the example:

Owner of a flight club is a commercial pilot.

Owner gets a contract to fly “traffic watch” and asks CFI to come along as well to assist in traffic reporting and also fly the airplane.

CFI agrees to do it free of charge because CFI needs flight hours for the airlines.

Is this considered “bartering” and can the CFI be obliged to pay taxes on what renting that airplane would have cost? (CFI normally has access to airplanes with only the cost of fuel to be paid.) Thanks in advance.

CFI flying for free considered bartering?
 

Here is the example:

Owner of a flight club is a commercial pilot.

Owner gets a contract to fly “traffic watch” and asks CFI to come along as well to assist in traffic reporting and also fly the airplane.

CFI agrees to do it free of charge because CFI needs flight hours for the airlines.

Is this considered “bartering” and can the CFI be obliged to pay taxes on what renting that airplane would have cost? (CFI normally has access to airplanes with only the cost of fuel to be paid.) Thanks in advance.

Working for free is always a benefit to those around you. While the industry constantly struggles to lower the bar in one form or another and only makes slow progress, by giving away professional labor, you're able to lower the bar much faster than others, giving you a real advantage when it comes to the race to the bottom. Most of us really appreciate the guy that works for free. On behalf of the industry, thanks!

As far as the value of your hours; the FAA considers the logging of flight time to be compensation. Unless your "employer" issues you documentation establishing a monetary value for the time you rode along, how is one to account for it?

If I do a flight to Paris, it's in an expensive airplane, and I do log the time. Should I pay tax on the time I logged? I think not. I get paid for my flight time, and I pay tax on the money that I receive from my employer.

If you fly as an instructor with a student and get paid for an hour of instruction, you'll end up paying tax on what you get from the employer or student; it may be as a contractor or employee, depending on your arrangement, but there's no tax you pay on the hour of flight time you logged: it's your job to fly, whether it's a trip around the pattern or a trip across the Atlantic.

If you're flying with someone doing traffic watch and refusing to get paid, it's possible that a dollar value could be attached to the aircraft, but is there any difference in that regard, if you're acting as pilot or instructor, from a trip around the pattern or a point to point flight on a charter? The value on which you're taxed isn't the cost of the airplane or the logged hour, but what you're paid.

While you're chewing on that, give some thought to being a professional. Professionals get paid. Professionals who give away their services do harm to the industry as a whole, and you're filling a seat that could have a paid pilot in it.

The owner is taking advantage of the situation; he's dangling a carrot in front of someone hungry enough for hours to prostitute themself. Some pilots are unprincipled enough that they'll justify paying for employment, to log the hours. A particular helicopter operator does a whirlwind trade in photographing boats on revenue flights, and gets his pilots to pay him to rent the helicopter...and he doesn't have a shortage of those willing to pay to work there. Flying for free really isn't any better.

Think about this: those who defecate in their bed must eventually lay in it, and you will; one day you may be the one crying loudest about your wages and quality of life...but every time someone flies for free, and every time someone pays for their job, they've contributed to the decline of the industry, and have defecated in the collective bed. Those are often the ones who howl the loudest, later on. Don't be that guy.

How many times are you going to spam this question, big guy?

https://www.airlinepilotforums.com/m...ml#post2819639

1. Yes the IRS would consider that income, if they found out which may not be likely.

2. How are you logging it? If the boss lets you be the PIC for free that's legal to log. But if he's logging it, you probably cannot. Not legal to log dual for an operation like that, there has to be some reason for instruction to occur, other than time building.

3. Professional pilots cringe when people talk about flying for free.

It seems a moderator has already extinguished comments addressing this, but in short, a pilot flying a charter isn't liable for taxes based on the cost of the airplane: he logs the time, but he's taxed on his wages. The flight instructor logs the time, but isn't taxed on the rental cost of the airplane: he's taxed on his income for providing instruction or pilot services.

The question of one who isn't accepting a wage, but logging the time doesn't place the flight time in a different light so far as whether it's a wage. The FAA certainly considers the logging of flight time as compensation, but the Federal Aviation Regulation is not the Federal Acquisition Regulation, and the FAA's view doesn't necessarily impose a tax burden.

Two people may log pilot in command. A flight instructor, acting as an authorized instructor, may log that time spent acting as an authorized instructor as pilot in command time. There is no requirement that the instructor be teaching stalls or steep turns. The instructor may be teaching ground reference in orbiting a crash scene while looking for traffic, or something along those lines, too. That said, the FAA does not view simply riding along as instruction: you must be giving instruction or acting as an authorized instructor, to log the time. Simply being present and holding a flight instructor certificate is insufficient.

Also, and more importantly, if you do act as an authorized instructor, you must document it: you must endorse the student's log or training record, and you must keep a permanent record. If you're not doing this, and you're logging the time as an instructor, you're opening up another line of legal jeopardy for your FAA certification. If you are logging it correctly and your "student" has a mishap, especially after a questionably long period of giving the same "instruction," you may find yourself on the hot seat with insurance subrogation or party to a civil suit. When you pick up one end of the stick, you pick up the other.

Yes. There was commentary on this; someone saw fit to delete it, rather than move it over here.

Federal Acquisition Regs have nothing to do with individual income or taxes, that has to do with the government buying stuff.


Of course there are many legit purposes for dual instruction other than certs and ratings... currency, proficiency, type fam, area fam, probably even mission fam in this case. But the FAA does not allow "indefinite" dual instruction for no good reason other than to allow two people to log the same flight time. Two instructors might do this on a XC with a rented plane and nobody would ever know. But if you're logging dual (received or given) for the same commercial operation day in, day out, that would raise eyebrows. And it's not legal, once you've exhausted reasonable purpose of instruction.

More legal to do safety pilot, since nobody would claim there's such a thing as too much instrument time, but there are limitations to that as well, and you really can't do it on traffic watch.

You may have missed the point. If you look past those trees, you may see the forest.

The FAA has never placed a limitation on the amount of instruction one may give a particular person.

Now, if one is stupid enough to place in one's logbook "Gave instruction for no good reason other than to allow us both to log PIC time," then the FAA may take a dim view. One may actually need to find another purpose to cite when logging that time and endorsing the other pilot's logbook. It might be ground reference maneuvers or training on operating lean of peak, or scanning for traffic, systems training, or coordination exercises, but there's a good chance that one can come up with something that one has focused on for the duration of the flight, and log accordingly.

Where is this "reasonable purpose of instruction" defined?

One may have an insurance requirement to have a certain amount of time in the aircraft, and until that benchmark is achieved, to fly with an instructor, or receive instruction in the aircraft from the instructor. An instructor might be giving operational training, company training, or any number of other kinds of training (operating in busy airspace, etc). I used to have an older gentleman who had a commercial pilot certificate, but who did not feel comfortable flying alone. He called me when he was in town, which was frequently, and paid me as an instructor to fly with him. A nice fellow, easy to get along with, no problems communicating or relating, I always found things we could work on, whether it was the landings, or flying from point to point, proximity to mountains, entering and exiting a traffic pattern, operating in reference to points on the ground (looking at autumn leaves), or whatever; we always found things to work on.

There are a lot of reasons an instructor might be on board; giving training toward a pilot certificate is only one possible reason. There is much else to teach, and there's a lot more to learn.

More legal?

The requirement for a safety pilot is clearly spelled out. it's not ambiguous. One doesn't need to be an instructor to do that, though one can certainly be, and one can certainly give instruction.

If flying and watching the ground continuously, a second set of eyes to watch for traffic may be well advised: there's no reason that one can't provide instruction at the same time.

This came up at our 141 school many years ago. Dude trained and applied for an ATP ride (under 61), and had a lot of time logged exactly in that fashion, IIRC it was 91 legs of a 135 op, he was allowed to be PIC on the 91 legs but the actual PIC also wanted to log it so they gave each other dual back and forth on different 91 legs. The DPE questioned it, our FSDO 141 inspector happened to be present, he didn't think it was good, so he called the FAA HQ folks, and they concurred no-go. Unfortunately for that dude the majority of his 1500 hours was either dual given or received in that operation... set him back a couple years. They didn't log "Gave instruction for no good reason other than to allow us both to log PIC time", but they might as well have, especially since they took turns "instructing" each other and did it for hundreds of hours.

I'm not aware of any FAA legal opinion issued, but I haven't looked either.

I did that too at one point, very similar arrangement, older gent who wasn't as sharp as he used to be when he was in his 80's. But it wasn't that much time in the grand scheme of things, and my guy pretty much did need "instruction" every leg (he got told by the TRACON boss never to fly alone again in their airspace, after he became notorious).

Insurance should be an easy sell... SOMEBODY at least is going on record saying that the student needs more instruction.

Semantics. SP is legal, dual given/received might not be if taken to excess.

A number of Chief legal counsel interpretations on the matter have been available for quite a few years.

If one is requested to be onboard as an instructor in the interest of safety, and acts mainly as pilot monitoring but also flies the plane and assists the operation, is that not legally acting as an instructor?

Keyword: safety. And the owner wanted a CFI onboard.

If the CFI wasn’t there perhaps the pilot would have killed himself trying to do the operation solo.

Also, we are hypothetically talking 100 hours total here. Not hundreds.

It's obviously a grey area, as you can see here. My one case study was a more extreme example, but may be worth considering. You have to make the call.

If you could find an FAA legal opinion that JB mentioned, that might help.

If you’re going to be onboard as an instructor, then be paid as an instructor. It is that simple. I’d say to stop whoring yourself out, but even hookers get paid.

Falls under an unpaid Internship in broadcasting journalism with an emphasis in aerial traffic reporting. Make sure you get a nice letter of reference for completing your internship from your mentor.

That income can be expensed out fairly easily in the grand scheme of things if it is just temp work, IMO.

Now if you are planning to do this a lot over a long period of time, when/if you get audited, the IRS will probably determine that you should have paid taxes and then it will be up to you, and your lawyers, to prove them wrong or reach a settlement.

BTW, you should also ask the owner how he is accounting for it. He may be trying to expense out his plane at a loss so his hobby is being paid for as a business tax deductions. If he gets nailed by the IRS, you will get pulled into an audit as well.