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NBAA sets out tax and regulatory compliance for change of use
If a company makes a business aircraft available for non-business use, then it will come up against some different tax and regulatory reporting implications. The NBAA's handbook sets out to clarify this complex area.

The NBAA has released a comprehensive update to its Personal Use of Business Aircraft Handbook that provides valuable tax and regulatory compliance strategies for when a company makes an aircraft available for non-business use.

“Employee security concerns and ongoing pandemic-related travel changes may lead companies to occasionally make business aircraft available to employees for non-business use,” says senior director for public policy and advocacy Scott O'Brien.

Personal use of business aircraft is a complex policy area, governed by the Internal Revenue Service (IRS), Securities and Exchange Commission (SEC) and FAA.

The NBAA Personal Use of Business Aircraft Handbook, a members-only resource, summarises these tax rules for company reporting purposes and for governing the calculation of a company's non-deductible expenses under the entertainment disallowance. The handbook also covers tax deduction rules for sole proprietors and employee-provided flights.

“The Personal Use Handbook helps companies, chief financial officers, advisors and legal representatives to navigate this challenging regulatory environment,” says O'Brien. “This is an important resource for flight department personnel who often work with their company's tax department and outside counsel to assist in the record keeping and classification of flights.”

The updated handbook also includes detailed charts summarising income inclusion and deductions, with examples for employer companies and sole proprietors, as well as new deduction-disallowance rules for commuting and business entertainment flights as stipulated by the Tax Cuts and Jobs Act of 2017.

“The NBAA Tax Committee worked collaboratively to finalise this updated guidance,” he continues. “In particular, the association extends its thanks to committee members Ruth Wimer, with Winston & Strawn LLP, and Sue Folkringa, with Aviation CPAs, for their leadership in the update process, and to John Hoover, with Holland & Knight LLP, for his expertise as the lead reviewer.”

Updates to the handbook will be examined at the 2022 NBAA Tax, Regulatory & Risk Management Conference, taking place October ahead of the 2022 NBAA-BACE.

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