WHAT ARE THE TAX IMPLICATIONS FOR MIXED BUSINESS AND PERSONAL USE?
Q: What are the tax differences between owning a fractional interest and owning a 100% interest? A: Very few. In general, the benefits and burdens from a tax point of view are exactly the same for ownership of a whole or fractional interest in and aircraft. There may be slight differences in Federal Excise Tax (“FET”) for “taxable transportation by air” provided to affiliates on a wholly owned aircraft, if they are not members of the same “affiliated group.” Most fractional programs charge FET on the hourly fee. There can be other differences in owning whole aircraft, especially in state sales, use and/or property taxes for locally based aircraft, or aircraft operated under charter management. Generally speaking, operating a whole aircraft or a fractional share should be the same for most Federal tax purposes. Q: If a fractional interest is used essentially for business and incidentally for personal use, how is the personal use taxed for income tax purposes? A: Formerly, the individual
