Creating an LLC

bc2209

bc2209

Well-Known Member
I recently had a conversation with someone who was talking about setting up and LLC as a commercial pilot in order to essentially use it for it's tax write-off purposes. The gentleman is a full time flight instructor. He retired from engineering and now is enjoying life teaching at a large school.

I have very limited knowledge regarding LLC's and especially tax write-offs, as I've never written anything off in my life.

However, he were saying that you could write many, many things off including CFI training.

Has anyone done this or had experience?

Is it worth the effort? Legal?
 
I'd like to know more about this in regards to owning an aircraft as well. I see lots of GA aircraft registered under an LLC. What are the pros and cons to this?
 
If it's just as a CFI, I probably wouldn't bother. Most of your goodies are going to go right on a Schedule "C" LLC or not.
 
^^^^^^ this
But I was told you can not write off new licenses but can maintaining an existing one. Airplane if business can be but not sure when it comes to instructing in one. Insurance if instructing is BAD, or so I have heard.
 
Dan208B said:
I'd like to know more about this in regards to owning an aircraft as well. I see lots of GA aircraft registered under an LLC. What are the pros and cons to this?
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Are you an AOPA member? If so you can call and talk to them about this.
 
ComplexHiAv8r said:
^^^^^^ this
But I was told you can not write off new licenses but can maintaining an existing one. Airplane if business can be but not sure when it comes to instructing in one. Insurance if instructing is BAD, or so I have heard.
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You can write off training that's required or makes you more marketable, but not if it leads you to a new type of business. Can't write off initial CFI, or initial commercial... but can potentially write off multi (or single) add-on, CFII, MEI.

Using an airplane for flight instruction certainly makes it a potential business asset. If you're going to go into that, it's presumed you'll take the time to understand the business situation you're involved in.

LLC doesn't gain you much for taxes, but it provides a partial (and relatively easily penetrable) shield against liability.

-Fox
 
It would only help those with tax liabilities large enough to justify it, but you have the option of writing off the entire purchase price of the plane in the first year of your aviation business (179 write off). Talk to a tax professional. I don't think an LLC or incorporation is required.

I own a sole-member LLC, not sure that it helps my bottom line any, but there are other advantages.
 
Acrofox said:
You can write off training that's required or makes you more marketable, but not if it leads you to a new type of business. Can't write off initial CFI, or initial commercial... but can potentially write off multi (or single) add-on, CFII, MEI.
-Fox
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I was able to write off my fixed wing instrument training as I did my commercial first and had a job as a pilot with a VFR only outfit (aerial photo). Got questioned on it and passed with "flying colors" ;) (pun intended)

When I was part owner in a software company developing video games I was able to write off my trips to the local arcade as market research. :stir:
Got questioned on that too! Was an allowed business expense.

Even wrote off my trips to E3 every year. Wonder if I can write off Sun and Fun and Oshkosh this year?
 
You don't need a LLC to write off aviation expenses.

You want a LLC to limit your personal liability based on the actions of your firm. For pilots, though, it gets really fuzzy as most of the work you do as a pilot could easily pierce the corporate bubble.

Talk to an attorney before starting a LLC.
 
LLCs are wonderful. It's not so much for tax benefits, though, but for liability shielding. Somebody slips and falls in one of my rental properties and wants to sue? Tough, you can't get anything that isn't held by the LLC. My personal assets are off limits, as are the assets of my other LLCs.
 
ATN_Pilot said:
LLCs are wonderful. It's not so much for tax benefits, though, but for liability shielding. Somebody slips and falls in one of my rental properties and wants to sue? Tough, you can't get anything that isn't held by the LLC. My personal assets are off limits, as are the assets of my other LLCs.
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I just sent in the paperwork for my LLC for my rent house. I have two rent houses. I know @amorris311 does one LLC per house. Do you do the same? I just got a new umbrella policy as well.
 
L-16B said:
I just sent in the paperwork for my LLC for my rent house. I have two rent houses. I know @amorris311 does one LLC per house. Do you do the same? I just got a new umbrella policy as well.
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For maximum liability protection, it's one per house. But that can get expensive in accountant's fees and attorneys' fees (if you're having an attorney set them up for you). I keep 2-3 properties per LLC. I feel that that gives me pretty solid protection. But I'm not as risk-averse as some people, so it's a personal decision.
 
Yeah, if you bought it personally and want to move it into an LLC, a simple quit claim deed is the way to go. Just don't record it with the court house if you have a mortgage on it, because the bank may call the loan.

Disclaimer: Nothing I post here is legal, tax, accounting, or real estate advice. Consult an accountant, attorney, or licensed real estate agent in your own state before making any decisions.
 
ATN_Pilot said:
Yeah, if you bought it personally and want to move it into an LLC, a simple quit claim deed is the way to go. Just don't record it with the court house if you have a mortgage on it, because the bank may call the loan.

Disclaimer: Nothing I post here is legal, tax, accounting, or real estate advice. Consult an accountant, attorney, or licensed real estate agent in your own state before making any decisions.
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Is it correct to assume that the money spent consulting these folks for the creation of an LLC for rental property is tax deductible?

I spent $800+ for a lawyer to take 2 phone calls and send/receive 3 emails with contracts attached for her review. Didn't seem like she told me any more than was able to be explained by my dad but the real estate agent I had highly recommended an attorney to through my documents.
 
SpiceWeasel said:
Is it correct to assume that the money spent consulting these folks for the creation of an LLC for rental property is tax deductible?
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Correct.

I spent $800+ for a lawyer to take 2 phone calls and send/receive 3 emails with contracts attached for her review. Didn't seem like she told me any more than was able to be explained by my dad but the real estate agent I had highly recommended an attorney to through my documents.
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Sounds like you got a bad attorney. A good attorney (or a good whole firm if you're using them as much as I am) is hard to find, but worth his weight in gold. Our firm charged us $1,000 to setup a new LLC, get the EIN, and draw up the Operating Declaration, including all of the state filing fees.
 
ATN_Pilot said:
LLCs are wonderful. It's not so much for tax benefits, though, but for liability shielding. Somebody slips and falls in one of my rental properties and wants to sue? Tough, you can't get anything that isn't held by the LLC. My personal assets are off limits, as are the assets of my other LLCs.
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I own my airplane in a single-member LLC to shield me from personal liability. It's managed by a flight school, and operated by it every day for flight instruction and rentals. Income tax-wise it's neither an advantage or disadvantage because Income & expenses appear on my personal tax return. The airplane is fully depreciated so any gain in a sale would be fully taxable.

YMMV. Consult a professional.
 
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