Taking a tax deduction on a PNP transport

[Tom N.]

Now that PNP is a 501c3, and people like me are starting to think about taking a tax deduction on their transport related expenses, I wanted to get clarification on one critical issue. Does taking a tax deduction on a flight constitute "compensation" under the FARs? There was a case back in the 1992 (Administrator v. Carter) that gets cited an awful lot in relation to this. Apparently, a private pilot flew a couple of speakers to a conference for a charity, and took the tax deduction. The FAA initiated an enforcement action for two reasons: 1) the flight failed the "common purpose" test, and 2) they construed the tax deduction as compensation.

Since, the issue has been clarified some what. The Air Care Alliance (the Angel Flight folks) has some good info on the topic: http://www.aircareall.org/tax.htm. But this clarification leaves open a question for PNP flights. To summarize:

1. "The FAA's policy supports "truly humanitarian efforts" to provide life flights to needy persons (including "compassionate flights"). ... The FAA will not treat charitable deductions of such costs, standing alone, as constituting "compensation or hire" for the purpose of enforcement of [the FARs]" That is, the FAA still thinks that deductions are compensation, but they are not going to enforce that rule where "humanitarian efforts" are involved. (So far so good...)

2. BUT the above specifically limits such deductions to "truly humanitarian efforts". AND the FAA provides examples of "truly humanitarian efforts" as "The most common purpose of life flights is to transport ill or injured persons who cannot financially afford commercial transport to appropriate medical treatment facilities, or to transport blood or human organs. Other "compassionate flights" include transporting a child to visit with a dying relative, or transporting a dying patient to return to the city of the patient's birth."

3. And they reiterated this in 2007 saying "By longstanding enforcement policy, the FAA has allowed aircraft operators who take a charitable tax deduction to transport a sick or injured person without that operator having an air carrier certificate."

Okay, so the question is this: Do PNP flights constitute "truly humanitarian efforts" under the FAA definition? If the examples they give are any indication, they seem to have a rather narrow view of what is "truly humanitarian." (For example, they don't even include material transport for disaster relief.) They seem to limit the scope to those flights benefiting sick or injured persons. If PNP flights are considered "truly humanitarian" by the FAA, then taking a tax deduction should not be a problem. If the animals are simply considered "cargo" then taking a tax deduction may be construed as "compensation," and any pilot/plane not properly certificated may end up in the cross hairs of a zealous FAA inspector.

Is this something we should seek clarification about from an FSDO?

Tom

[Jon]

Tom, I would not hesitate to clarify this with your FSDO.

We looked at this solely from the perspective of getting IRS approval of the 501c3, and did not consider that flying at-risk animals would not be allowable under FAA rules. Make certain when you discuss this that it is very clear that we are transporting animals that would otherwise be euthanized to a foster home or animal rescue that will find a permanent home most often. We do however also transport service animals on occasion. We do not transport pets that are owned, and if a pilot does it is not a "rescue".

Remember, getting a tax deduction is not compensation. It just means you are not obligated to pay taxes on money you spent to do an animal transport. I am not certain the FAA cares what the IRS constitutes as a legitimate donation. None of these flights are for hire.

[richclover]

Tom, I would not hesitate to clarify this with your FSDO.

We looked at this solely from the perspective of getting IRS approval of the 501c3, and did not consider that flying at-risk animals would not be allowable under FAA rules. Make certain when you discuss this that it is very clear that we are transporting animals that would otherwise be euthanized to a foster home or animal rescue that will find a permanent home most often. We do however also transport service animals on occasion. We do not transport pets that are owned, and if a pilot does it is not a "rescue".

Remember, getting a tax deduction is not compensation. It just means you are not obligated to pay taxes on money you spent to do an animal transport. I am not certain the FAA cares what the IRS constitutes as a legitimate donation. None of these flights are for hire.

Thanks, Jon, for your efforts toward a good end. Right, IRS approval is one thing, FAA is another.

However, we do transport "owned" pets. Tank, the pit bull, was in a shelter, isolated from his owners, and would have been put down if not for Black Dog Animal Rescue. Tank was re-united with his family. Because of this website.

I see no difference between this flight and one requested by a Rescue just re-locating a critter. Another example: A dog from a Rescue being moved to an adoptive "home" ... Been there, done that Is the dog "owned" or not? Sure, moving Aunt Bertha's dog from her house to her daughter's house for the summer isn't a "rescue".

Best we have our "Papers in Order" before we sit down at the Long Green Table. BUT, Jill and I will NOT allow lack of a tax deduction to stop us from doing some Good!

[RichBruder]

This may help.

As pilots, we take deductions after the fact (ie, after the flight). If you bend the plane, get a request from the tower to "call them on a landline after you land," or are subjected to a "ramp check" with the dog in the backseat, don't deduct the flight.

This is indeed a good question, but it seems like the only way we could come to grief is if the FAA, in connection with an enforcement action, conducts an "audit" of our logbook and cross references our PNP logged flights with our tax return.

In theory, yes, but seems unlikely that it would happen.

Still, I would be curious as to what the FSDO says. Again, a thoughtful question.

Rich

[Jon]

Rich,

I'm not sure I understand the jist of your post.

I don't think the FAA cares if I carry my grandson, my dogs or dogs being rescued as long as I have them secured properly and I am within my weight and balance limitations.

If the FAA wishes to examine my logbooks, they and the IRS can join me and we all can review them. I log my flight hours just like anybody, and if the flight was conducted for purposes of animal rescue I cannot see where the FAA or the IRS will determine I did something improper.

[Tom N.]

Jon, thank you for all your hard work on behalf of PNP.

Remember, getting a tax deduction is not compensation. It just means you are not obligated to pay taxes on money you spent to do an animal transport. I am not certain the FAA cares what the IRS constitutes as a legitimate donation. None of these flights are for hire.

This is precisely the issue, though. The FAA doesn't care what the IRS constitutes a legitimate donation. Even if the IRS says it is a legitimate donation, the FAA might disagree for the purposes of enforcing the FARs. From that I understand, the FAA has in the past, construed tax deductions as "compensation" for the purposes of enforcing the FARs. They seem to take the maximalist position that seems to say that any financial gain (even a reduction of tax obligations resulting for a charitable donation) connected to a flight can be construed as "compensation". The exception to this enforcement policy has been the "Angel Flight Rule".

So, the question is whether PNP flights fit the definition of "truly humanitarian" causes under the Angel Flight Rule and is eligible for the Angel Flight exception to the enforcement of the FARs.

If the FAA wishes to examine my logbooks, they and the IRS can join me and we all can review them. I log my flight hours just like anybody, and if the flight was conducted for purposes of animal rescue I cannot see where the FAA or the IRS will determine I did something improper.

If animal rescue qualifies for the Angel Flight exception, then we are home free. But if the FAA says that animal rescue does not meet their definition of "truly humanitarian" causes, then I would hold off on that sit down with the FAA and IRS .

I think this bears clarification with an FSDO. I can certainly call my local FSDO for clarification. But perhaps this request for clarification of policy should come from PNP as an organization?

[staylor4]

Referring to the post: "Deployed soldier needs help! Moore OK to Ozark AL, Apirl 18", posted on April 7, this looks like a very worthy mission for a deserving individual, but does it meet the test of a 'rescue'? Personally, I'd consider flying the mission but I certainly wouldn't try to claim in as a charitable donation, based on the comments written above. Any comments?
Sam

[richclover]

Remember, getting a tax deduction is not compensation. It just means you are not obligated to pay taxes on money you spent to do an animal transport. I am not certain the FAA cares what the IRS constitutes as a legitimate donation. None of these flights are for hire.

FWIW, Jon, I sent an email to AOPA today asking about this issue. They are on our side, it seems. AOPA response is basically what you stated: tax deduction is not compensation.

I agree, none of my flights are "for hire". I've politely refused several offers of help with fuel cost.

[admin]

Referring to the post: "Deployed soldier needs help! Moore OK to Ozark AL, Apirl 18", posted on April 7, this looks like a very worthy mission for a deserving individual, but does it meet the test of a 'rescue'? Personally, I'd consider flying the mission but I certainly wouldn't try to claim in as a charitable donation, based on the comments written above. Any comments?
Sam

Sam, I don't see any repiles specifically to your question. Regarding the military request this is definitely a worthy mission and as long as it is done on the PNP board I see no reason why you could not treat this the same as any other flight. Not all animals who need help are in kill shelters or already with rescue. This does not lessen the fact that they need help or they just might end up in a shelter!

Another part of rescue work is trying to find help for animals in need when their owners hit hard times, are transferred, deployed, etc. We look at it this way, if we can help them the animals will benefit. If we don't help them, they may end up in a kill shelter or free to good home on Craigs list! Our primary focus, at least for our group, is the animals in immediate danger of being euthanized. I believe that to be true of most rescues. However this does not negate the other animals in need. We have had many many requests for assistance from military personnel.......there are even temporary foster groups set up to foster these animals while the soldiers are gone.

I hope this sheds some light on your question.

Debi