PnP flight expense as charitable donation

[msankaran]

This is a question for pilots who own their plane and deduct their PnP flying expense as a charitable donation. The question is,what expenses do you deduct? Do you calculate a comprehensive per hour operating cost for your plane, taking into account such items as engine overhaul cost, insurance cost, hangar cost, fuel etc., etc. divided by a typical number of hours flown in a year (say, 100) or do you just deduct the actual direct cost of the trip, which is probably going to consist largely of fuel cost? Any input from pilot-owners would be much appreciated. Thanks.

Mahesh

[cardrac2000]

I take the conservative route and only deduct expenses for which I have a receipt. I've dealt with far too many government officials and audits that I expect them to argue that I can't deduct the insurance since I'm not required to have it, the hangar since I could tie-down for much less, or the engine overhaul because it is either speculation at this point or an expense already incurred with no bearing on recent flights, etc. For me, it isn't worth the potential aggravation since the bulk of the cost is fuel and comes with easy documentation. However, the cost savings may be worth it to you. That's why we all get to decide for ourselves.

[msankaran]

Thank you for your reply. Your thoughts on various possible objections are very helpful.

Mahesh

[Steve Foley]

I believe the IRS would treat aircraft expenses the same way they treat automobile expenses. The IRS specifically excludes general repair and maintenance, depreciation, registration fees, cost of tires and insurance, so I suspect they would only allow fuel, oil, parking fees, landing fees, ramp fees, etc, that are directly related to the transport.


From the IRS publication 526:

Car expenses. You can deduct unreimbursed out-of-pocket expenses, such as the cost of gas and oil, that are directly related to the use of your car in giving services to a charitable organization. You cannot deduct general repair and maintenance expenses, depreciation, registration fees, or the costs of tires or insurance.

If you do not want to deduct your actual expenses, you can use a standard mileage rate of 14 cents a mile to figure your contribution.

You can deduct parking fees and tolls, whether you use your actual expenses or the standard mileage rate.

You must keep reliable written records of your car expenses. For more information, see Car expenses under Records To Keep, later.

[msankaran]

Thank you very much for the post, Steve. So, if one rented an airplane to be used for PnP flights, one could deduct the cost of rental, which includes maintenance, repair, insurance, etc., but those same costs cannot be deducted if one owns the same plane? It seems a little unfair, but I guess tax laws aren't required to be fair.

[Steve Foley]

Thank you very much for the post, Steve. So, if one rented an airplane to be used for PnP flights, one could deduct the cost of rental, which includes maintenance, repair, insurance, etc., but those same costs cannot be deducted if one owns the same plane? It seems a little unfair, but I guess tax laws aren't required to be fair.

What it boils down to is the difference in cost between flying the mission and not flying the mission. If you don't rent a plane today because your not flying a mission, your cost is zero. On the other hand, if you don't fly today and you own a plane, you are still incurring insurance costs, as well as a fair amount of maintenance costs. I can tell you from experience, a plane still costs plenty to maintain even if you're not flying it. There are some items that are directly proportional to the number of hours flown, but many maintenance items are simply calendar based.

The IRS is simply allowing you to deduct money you spent on the transport that you otherwise would not have spent. The same thing goes for automobiles. If you own a car, you can deduct fuel and oil, where if you rent one, you can deduct the rental charge.

[msankaran]

Thanks for your reply, Steve. The notion that certain expenses such as insurance and hangar rental are calendar based and do not depend on the number of hours flown certainly makes sense. However, what about the cost of engine overhaul? Every hour that one flies brings one closer to TBO and the cost of overhaul - the cost of engine overhaul would seem to be a variable cost that is directly dependent on hours flown. Other maintenance costs such as oil, tires etc. are also dependent on hours flown. One would think that the cost per hour flown (and hence deductible) should include these direct costs in addition to fuel, landing fees, etc.

Mahesh

[Steve Foley]

Two answers for you.

1) The IRS is an organization of bean counters. They want receipts for everything. Since you don't know the actual cost of the overhaul and the number of hours until the overhaul actually takes place, you can't determine a cost per hour ahead of time.

2) Lycoming recommends a 12 year TBO if the engine does not run the specific number of hours. So TBO is calendar based too, unless you're flying at least 80 hours per year (for a 2000 hour TBO)

I don't make the rules, I'm just trying to figure them out.

[msankaran]

I appreciate your engaging in this discussion with me, Steve. It has been very informative.

Mahesh

[sgavette]

Do you deduct the entire flight, or just the part of the flight with the "passenger" on board? Does the length of time make any difference? If I fly out the day before I am scheduled to pick up a transport and spend the night, does that affect any deduction?