Calculation of hourly operational costs

[James Pyke]

I saw on a web site when I was looking for car allowances a number of 1.26 per mile flown. This was for small planes. http://www.gsa.gov/Portal/gsa/ep/conten ... entId=9646 if no luck with this one try google "mileage reimbursement"

Jim

[n789sd]

Don't know if this applies but I did an MBA paper on operational costs for a 2007 Cessna Turbo 206. The fixed major cost most people don't think about is the cost of insurance if the plane is part of a flight school or charter service and how much the plane looses in value over time (sure you get some back on tax depreciation). The plane I did the paper on would be leased out at $300/hr and needed to fly 400hrs a year just to break even. This included the fixed costs of servicing the aircraft loan, the insurance (higher since it was used by a flight school), hangar fees and the variable costs to gas, oil, 100 (this goes up as you use the plane more) and annual maintenance, fund for overhaul of engine and prop, Garmin and Jepessen electronic updates for the Garmin 1000, XM satellite subscription for the onboard weather, VFR IFR and approach plates for the region, IPC training, maintenance of proficiency training (those 3 stop and goes every 3 months at night, those 6 IFR approaches every 6 months) oxygen refills, hangar equipment like a tug (those 206s are heavy), Tannis heating system for the winter, flint tip tanks for extended range and some other stuff like that. Your plane may be less, especially if you don't use it to charter or for flight training. A good way to gauge your costs is to find a flight school or charter service that flies a plane like yours. Their rental fee will be a good indication of how much is really costs to fly.

[pojawis]

I think part of the confusion here is that we have to dance to the beat of two different drummers; the FAA and the IRS. Their rules can be a bit different when is comes to compensation for using aircraft for charitable contributions.

I've done some EAA Young Eagle flights and the EAA folks clearly advised me that deductions directly related to the flight can only be what is consumed during the flight; fuel & oil. They expressly identified insurance, tiedown fees, etc. as NOT allowable. My accountant says that the IRS will allow just about anything directly related to the event. I would think this would make food, hotels, driving time, etc. allowable tax deductions. This also can include postage, long distance calls (if there is such a thing anymore), and other expenses incurred "doing business" for the charitable organization. The key, I believe, is to use deductions wisely. Deductions should be reported is such a way as to not trigger an audit. Your accountant can be very useful in this area.

When talking with the IRS a few years ago, their representative informed me that they wanted me to take all the deductions I was allowed. Sounded good to me, but I still am cautious.

I don't have any formal training in the tax arena and am speaking from experience only. I am not a qulified accountant nor a tax advisor. All info offered here is subject to scrutiny.

[n789sd]

I have interesting news from my aircraft tax accountants. They said that if I claim my flights as charity flights I can deduct the costs associated with the flights. However I can't claim the depreciation. If I claim the flights as "personal non-entertainment" then I can claim the costs and the depreciation. I'm not sure how this works or what it looks like on the tax schedules buts thats they way they will proceed with my 2009 taxes. I got the advice directly so its not on the web, but the same company has some good articles that they post, here they are in PDF format http://www.advocatetax.com/hotTopics.php on some other topics.

Denis

[Jon]

I would urge everyone here to have their own tax accountants define acceptibility of deductions based on each individuals financial situation.

What may be appropriate for one of us may be completely incorrect for someone else. If it is not posted yet, it will be and that is a letter from our attorney confirming the acceptibility of treating expenses for animal transports posted on this site as charitable donations, and the tax advantages are NOT considered compensation by the FAA.

[wilburwong]

I have a more general question after finishing my first PNP flight. Actually not sure if the flight was an actual PNP flight but the first person who contacted me, got my name from a response to a post on PNP; so I will presume that it was on PNP since the dog is going from San Diego to Minneapolis, MN as the final destination.

Is there any other documentation other than the Pilots N Paws Flight Record that you need when doing your taxes? Also, does anyone know what the status of PNP getting their 503c (?) or charitable organization status?

[Jon]

I wish I had the answer. I will reluctantly suggest you contact the AOPA legal counsel or the IRS and outline the circumstances.

As PNP matures and develops a lot of flights are being done by people who are contacted or brought into the mission off site. That does not make the flight any less a PNP transport. Ideally the request is posted and you respond to the request on the site and then can print out the thread to prove it was done under the auspices of PNP which while only a bulletin board still is a 501C3 with respect to transports and allowing the deductions.

But those of us who are PNP pilots who do transports posted on PNP are also contacted privately by rescues who we have worked with in the past. I don't think those flights are any less PNP flights as those that happen to be posted. But my opinion does not count. The only folks whose opinion holds and weight are the IRS and the FAA.

FWIW I file flight plans for all my flights and list them as PNP flights in the remarks section.

[davidtg]

Hi, all --

I wish I had the answer. I will reluctantly suggest you contact the AOPA legal counsel or the IRS and outline the circumstances.
[snip]

I second that, naturally. I have, however, recently spoken with my accountant, and he had these suggestions:

- All direct expenses should be deductible. That's gas and landing fees plus anything else that is a specific part of a trip; easy enough.

- If I buy some piece of gear to enable me to do PnP flights, it's probably deductible as well. We're going to look closely at this, since we hope to add some basic equipment that will facilitate the XC travel needed for transports and at the very least have had to get some out-of-town charts.

- Oil changes very well may be deductible since they're directly related to hours flown. We didn't discuss a 100-hr inspection 'cuz I don't do that.

- If I were to set up a depreciation schedule for the plane, then it's quite possible that we might be able to deduct a proportional percentage of non-flying-hours-related costs like tiedown/hangar and annual inspections. I doubt we'll be going this far, but we might; we'll see how things look in six months.

IANAL and IANAA and so on, and there is no single answer for all, but these may be good points to bring up with your own advisor. I'll try to remember to follow up later this year and -- more importantly -- after the details are worked out next April :-)


HTH & HAND

[davidtg]

Wilbur, et al --

I have a more general question after finishing my first PNP flight.

Congratulations, by the way! :-)

...
Is there any other documentation other than the Pilots N Paws Flight Record that you need when doing your taxes? Also, does anyone know what the status of PNP getting their 503c (?) or charitable organization status?

PnP has, indeed, been approved with 501(c)(3) status. Surf to the PnP front page and look under "Pilot Tools" to find http://pilotsnpaws.org/flightform.pdf for recording your flights.


HTH & HAND

[emartin]

Hourly cost,take your morgage,everything your wife spends!(which you dont know about) all your utilities Add 50% and devide that by 12 a month.Dont forget to add in the 1600 it cost everytime your plane hiccups and the bank and insurance co and hanger fee.I figure its about 1000$ an hour.But thats between me and you,wife has it figured at 900$an hr