AVIATION INDUSTRY

We provide comprehensive, turnkey aircraft acquisition tax consulting services designed to maximize income tax savings, minimize sales and use tax costs, and legally avoid federal excise taxes, all while fully complying with Federal Aviation Administration (“FAA”) regulations. The success of any acquisition structure depends on close collaboration between the Client, our firm, and the other professionals involved in the transaction.

Our approach ensures that the acquisition structure (the “Structure”) complies with all applicable Federal Aviation Regulations (“FARs”) — to the extent the Client follows the executed documentation. Because the ability to legally minimize or avoid sales and use taxes varies by state, meticulous planning and precise execution are essential. The Structure is not intended to create income tax deductions beyond what is allowed under the Internal Revenue Code (“IRC”); rather, it maximizes the effectiveness of the transaction from a tax perspective while respecting limitations on basis, passive activity rules, and other IRC constraints. Deductions arise only from the aircraft’s use in a bona fide trade or business operated for profit, and not for personal or hobby use. Proper integration of the aircraft into business operations is critical to ensure compliance with FARs while generating ordinary and necessary business expenses in reasonable amounts.

The planning process begins with a thorough review of the Client’s business structure, tax considerations, and anticipated aircraft use. Liability exposure is an inherent consideration in aircraft ownership and operation, and organizational structures may help mitigate that liability. Insurance coverage must also be carefully assessed, as policies are contractual in nature and vary in scope. Based on this analysis, we propose a customized acquisition structure designed to minimize sales and use taxes, comply with FAA regulations, limit liability, and achieve the client’s income tax objectives.

Once the Client approves the proposed Structure, we work closely with the Client and other professionals to implement the plan. This includes preparation of contractual agreements, aircraft registration, and coordination with federal, state, and local tax and regulatory authorities. We also provide guidance on FAA and tax record-keeping requirements, operational responsibilities, and ongoing compliance to ensure the Structure functions as intended.

Through this integrated, client-focused approach, we help aircraft owners acquire, structure, and operate their aircraft efficiently, safely, and in full compliance with applicable laws and regulations.

Once an aircraft acquisition is complete, owning and operating an aircraft brings a host of regulatory, tax, and operational challenges. Our firm has leveraged our extensive experience in corporate, tax and, and aviation law to provide comprehensive legal consulting for a wide range of Clients, including businesses, individuals, and fixed-base operators (“FBOs”). Our services are designed to ensure compliance with Federal Aviation Administration (“FAA”) regulations, Internal Revenue Service (“IRS”) rules, and other applicable laws, while optimizing operational efficiency and mitigating liability exposure.

We have represented Clients in general aviation operations and transactions, including, but not limited to:

• Entity and Ownership Structuring – Identifying the optimal entity structure to hold and operate an aircraft.
• Operational Compliance – Designing operational structures that comply with FAA non-commercial limitations, meet IRS trade or business requirements, and manage liability exposure.
• Transaction Documentation – Drafting and reviewing purchase agreements, operating agreements, aircraft leases, management agreements, and assisting Clients with timely filings to the FAA and other regulatory agencies.
• Consulting and Record-Keeping – Advising on proper documentation, outlining required record-keeping systems, and coordinating with certified public accountants (“CPAs”) and other professionals to ensure operational and tax compliance.
• Aircraft Tax Accounting – Providing aircraft tax accounting services, including Fringe Benefit Standard Industry Fare Level (“SIFL”) calculations, depreciation analysis, and sales tax planning.
• IRS and Audit Support – Assisting with IRS disputes, aircraft audits, and related compliance matters.
• Operational Analysis – Evaluating Part 91 vs. Part 135 operations, passive activity and hobby loss considerations, and personal use implications.
• Liability Planning – Advising on aircraft liability management, co-ownership structuring, fractional ownership, and related risk mitigation.
• Regulatory Compliance – Supporting aircraft registration, aviation tax compliance, and other FAA and federal requirements.

Through this integrated approach, we provide Clients with practical, Michigan-focused legal guidance to acquire, structure, and operate aircraft safely, efficiently, and in full compliance with applicable aviation and tax laws.