UAL T38 Phlyer

I'm kicking around the idea of getting an Experimental (RV-8; F-1 Rocket) to do aerobatic flight instruction in when I retire from the Air Force.

I'm fairly certain this can be done legally. I know you can't charge for the aircraft per se, but can "share expenses." As I understand it, that would mean I could have students pay for the fuel, and I would charge for my instruction.

This would not be a sole-source of income idea. Rather, an augmented hobby, so I could justify the expenses of owning an airplane.

The question: could any portion of the aircraft's expenses (hangar/tiedown, annual, insurance, Ads, repairs) be written-off as business expenses?

On the one hand I think yes, and on the other, maybe not, since I would not be able to charge a profit for the use of the aircraft. More of an "incidental to business fee"........albeit a rather LARGE incidental fee.

Anyone with experience in this area, I would appreciate your insight.

jcaplins

I think you would opening up yourself for all kinds of problems with the FAA. They will see through the thinly veiled disguise of "shared expenses" and "I'm only charging for my time."

You might get away with it for a little while if by "share expenses" you mean half the fuel right? right? And you're only charging $20-$40 per hour (give or take).

If you start charging $150/hr for your "time", you will be in trouble. If you set this up as a business, there is no veil at all.

It's really doesn't matter what you are doing, it the perception of the FAA that counts, and the FAA says commercial ops and renting an experimental aircraft are a no-no.

However...There is the option for getting a "LODA", letter of deviation authorization (or something like that) that will allow you to charge for your time and expenses for the purposes of transition training (usually required by insurance companies). From what I understand these are very difficult to obtain and many FAA people are clueless as to what it is and how to get one. But it is possible. Getting one to provide acro instruction will most likely never happen.

(I'm building an RV7 have done a fair amount of research on the subject. Disclaimer: everything I type can be and probably is wrong. )

rickair7777

I suspect that it could be written off as far as the IRS is concerned...you can call it a business, and generate revenue (obviously not a profit). The IRS is like the rackets...they don't care if your income is legal, they just want their cut. But then you'd have to pay taxes on the student's pro-rata share...maybe best to just pocket that and call it good.

But I also suspect that the act of writing off expenses related to an experimental airplane used for flight instruction might tip the scales towards "for hire" as far as the FAA is concerned. It's admin law, they have a lot of latitude.

You can probably split time with a student since you are an experienced professional pilot and are not benefiting from building ASEL PIC time. But split it accurately, don't fudge the numbers in your favor. I don't think you have to pay taxes on income from time splitting...it's not income, it's reimbursement.

Honestly I'd talk to a lawyer before going down this road, or at least clear it with your local FSDO.

NoyGonnaDoIt

Either you are two pilots on a flight somewhere you were both going to go to anyway (the "bona fide common purpose" to be at a certain destination required in order to split expenses) or you are an instructor giving instruction trying to get around the prohibition of charging for an experimental aircraft.

tailwheelpilot

You can apply for a LODA and get authorization to provide "Transition Training" in the RV8. That training can focus on the aerobatic aspects of the aircraft and would need to include basic flight as well. Keep in mind, the insurance cost for such training is pretty ridiculous and often cost prohibitive.

I am an RV owner and provide transition training pro rata.

UAL T38 Phlyer

Tailwheel:

I figured there must be some way, as there are several companies that provide time in military aircraft. All of them are licensed as either Experimentals or Limiteds.

When you say "Pro rata," does that mean you charge actual operating costs?

All: good words, and the reason I asked here. It seemed grey to me, and I was curious if others had crossed this bridge.

tailwheelpilot

Go to vansairforce.net and sign in and search. VAF is a great place for info on RV's and Experimentals in general. A LODA (Letter Of Deviation Authority) is pretty easy to get. RV 8's are very popular and people are looking for transition training. I just turned away someone last week looking for training.

Yes, by "Pro Rata" I mean "shared" expense. I only do transition training in the -7 and -9 and only for people local.

rotorhead1026

No. In fact, many small and otherwise legitimate businesses have been reclassified as "hobbies" by IRS; all deductions are then disallowed, sometimes retroactively. This generally occurs when the "business" shows a loss over multiple years. It wouldn't happen for, say, a machine ship (or for General Motors :)). Something like a horse riding school / stable where the owner keeps his own horses would be fair game, though. You're starting out honestly to begin with - hobbies aren't deductible - but the owner-owned aircraft "one horse" flight instruction scheme is a classic case.

The LODA is a good deal, though; then you can charge enough to (hopefully) turn a profit. See above, though, if you consistently show a loss. Remember, you're in aviation.

Consult a good tax / corporate attorney (of which I am not!) before you even start looking for the airplane. All of the advice on an internet forum (including this post) is suspect. :)