Help with Schedule C for aircraft leasebacks - filing questions for my aviation business

Thank you so much! That business code sounds much better than the generic one. Since my aircraft is definitely used more than 50% for business (it's basically 100% a business asset), would you recommend I take the bonus depreciation? The plane was actually purchased last year, so I'm guessing that might affect things. Also, do you know if I need to file any additional forms beyond Schedule C for this type of business arrangement?

Since your aircraft was purchased last year, you'll need to determine which tax year it was placed in service and what bonus depreciation rate applied then. If it was 2023, the bonus rate would have been 80%. If it was 2022, it would have been 100%. I generally recommend taking bonus depreciation when eligible - it gives you a larger deduction upfront, though you need to consider if a large deduction now versus spreading it out makes more sense for your tax situation. For forms, you'll need Form 4562 for depreciation and amortization. Since you have a single-member LLC that's not electing to be taxed as a corporation, you'll report everything on your personal return - Schedule C, Schedule SE for self-employment tax, and possibly Form 8829 if you have a home office for the business. If you made any estimated tax payments throughout the year, make sure those are reported correctly too.

Does it actually understand aviation-specific tax issues? I've used regular tax software before and it was clueless about things like lease agreements and per-hour maintenance reserves. How much did you save after using it?

I'm a bit skeptical about online tax services understanding niche aviation scenarios. Can it handle the difference between Part 91 and Part 135 operations? Does it understand how to properly classify different types of aviation expenses and navigate depreciation recapture for aviation assets?

It absolutely does understand aviation tax issues! What impressed me was that it knew the difference between variable costs (fuel, oil, maintenance reserves) versus fixed costs (insurance, hangar) and how they should be treated differently. It even flagged that I had incorrectly categorized some avionics upgrades as repairs when they should have been capitalized improvements. I saved about $12,000 in deductions I would have missed with regular tax software. The system caught that I hadn't properly documented my business flights versus personal flights, which could have been a huge audit risk. And yes, it definitely understands the Part 91 vs Part 135 distinction - it asked specific questions about my operating certificate and management arrangement to determine the right tax treatment.

Wait, how does this actually work? I've tried calling the IRS about my business and got nowhere. Does this service just keep dialing for you or something?

Yeah right... you expect me to believe you got through to a knowledgeable IRS agent who actually understood aviation tax rules? Most of them don't even understand basic Schedule C issues. Sounds like a waste of money to me. I've been filing for my Cherokee on leaseback for years and never once got useful info from the IRS.

It uses a system that essentially waits on hold for you and then connects you when an agent becomes available. Instead of you personally waiting on hold for hours, their system does it and calls you when it's your turn. It's not magic - it's just a more efficient way to deal with the hold times. You're right that not every IRS agent understands aviation tax rules specifically. I got lucky and was connected with someone in the small business division who had dealt with similar cases before. But even a general business tax specialist can clarify the basic Schedule C questions like business code classification, depreciation categories, and expense tracking requirements. I found it valuable just to get official clarification on documentation requirements for business use percentage.

Thanks for this advice! For the flight logs, I have a digital system through the club that tracks everything, but should I be keeping separate records specifically for tax purposes? And regarding the marketing agreement - it's fairly basic. Should I look into getting a more detailed contract drafted?

The digital logs from the club are a good start, but I recommend keeping your own backup records specifically focused on the business aspects. For tax purposes, you want to document not just who flew and when, but the specific business purpose of each flight. For instance, if it was a rental, note the customer and purpose. If it was maintenance-related, document what was being tested or verified. Regarding your marketing agreement - yes, absolutely get a more detailed contract. A basic agreement likely won't provide adequate protection in case of an audit. Have an aviation attorney review it to ensure it properly establishes your relationship with the club, ownership rights, maintenance responsibilities, insurance requirements, and how income/expenses are allocated. A proper contract not only protects your business relationship but also helps establish the legitimacy of your business operation to the IRS.

Not OP, but I have a Seminole on leaseback in Florida. Multi-engine aircraft typically follow the same 5-year MACRS depreciation schedule, but your operating costs will be substantially higher than a single engine. The real question is whether you'll generate enough rental income to offset the higher costs of operating a twin. For a Seminole, you're looking at roughly $280-350/hr rental rate depending on your market, but your insurance will be significantly higher than a single engine aircraft. As for state taxes, Florida doesn't have personal property tax on aircraft, but many states do. I know California, Texas, and Georgia all have some form of property tax on aircraft that can run 1-2% of the value annually.