Tax deduction - charitable flights

[Murdoughnut]

I recently worked with a group of Boy Scouts to help them earn their aviation merit badge, and I'm planning on doing it as a regular thing for local troops. Does anyone have any experience in deducting their flight expenses as a donation to a charitable organization when you do flights such as these for free? I figured if I could do something good, and receive some sort of tax deduction which would, in turn, lessen my flight expenses at the end of the year, that would be great. Just curious if anyone had ever deducted these flights before. Thanks!

 

[I_Money]

They should be able to provide you with documentation of your donation.

 

[slushie]

To me, it's not even worth messing around with. And I have a hundred or so hours that I could call "charitable."

 

[Murdoughnut]

To me, it's not even worth messing around with. And I have a hundred or so hours that I could call "charitable."

Yeah, I thought that there was a minimum amount that you had to reach before receiving any sort of deduction, but I'm not sure what it is.

 

[Texasspilot]

Actually a guy I used to fly with had his own bonanza or mooney(cant remember) but he used it to fly angel flight with and was able to deduct all his oil, mx, and hanger expenses for the year as well as some gas because of it.

Not sure of the specifics but this is what I was told.

 

[slushie]

Yeah, I thought that there was a minimum amount that you had to reach before receiving any sort of deduction, but I'm not sure what it is.

No I meant the it's not worth it due to the potential hassle with the IRS, and more importantly, the FAA.

Actually a guy I used to fly with had his own bonanza or mooney(cant remember) but he used it to fly angel flight with and was able to deduct all his oil, mx, and hanger expenses for the year as well as some gas because of it.

Not sure of the specifics but this is what I was told.

I would be much more comfortable doing it for an established program like Angel Flights. In fact, the Boy Scouts' merit badges would be something legitimate, but I would call up angel flights and similar organizations to see how their pilots handle the topic.

 

[tonyw]

I think you can deduct all of your expenses -- the rental, fuel, landing fees, the whole nine yards -- if it's done for a charitable organization with a piece of paper which says the IRS recognizes it as one.

I'd give AOPA a call.

 

[aloft]

You can deduct your expenses, but if you're a private pilot, you'd better not log the time...the FAA's whole "hours as compensation" b.s......

 

[Minnesota_Flyer]

AOPA has several guides on this. You can deduct your expenses incurred giving the flights for a valid 501(c)(3) -- rental, fuel, oil used, etc. If you own the plane, it is much more complicated, and you probably want to find help.

FAA no longer takes the position that seeking a tax deduction for charitable flights is "compensation" (again, according to AOPA).

 

[Murdoughnut]

Interesting - I'll definitely contact AOPA - thanks for the help!

 

[aloft]

FAA no longer takes the position that seeking a tax deduction for charitable flights is "compensation" (again, according to AOPA).

True...but again, they DO view the logged flight time as compensation, so a private pilot can either log the time OR take the deduction...but not both.

 

[tonyw]

True...but again, they DO view the logged flight time as compensation, so a private pilot can either log the time OR take the deduction...but not both.

If this is the case, then you can ONLY take the deduction since you can't log the time.

 

[MidlifeFlyer]

There is a group of two FAA Legal Opinions and an FAA Order that deals with Angel Flight and similar organizations. Originally, FAA Legal said that the deduction was compensation and Angel Flight required a Part 135 operating certificate. Fortunately that answer was given to a US Senator and Legal reversed itself, but on "policy" not "legal" grounds (the oriignal opinion was probably correct).

The current official policy is in Air Transportation Operations Inspectors Handbook, FAA Order 8400.10, Vol. 4, Chap. 5, Sect. 1, Para 1345

==============================
1345. FAA POLICY REGARDING "COMPENSATION OR HIRE" CONSIDERATIONS FOR CHARITABLE FLIGHTS OR LIFE FLIGHTS. Various organizations and pilots are conducting flights that are characterized as "volunteer," "charity," or "humanitarian." These flights are referred to by numerous generic names, including "lifeline flights," "life flights," "mercy flights," and "angel flights." These types of flights will be referred to as "life flights" in this section.

A. Purposes for Life Flights. The types of organizations and pilots involved with or conducting life flights vary greatly. The most common purpose of life flights is to transport ill or injured persons who cannot financially afford commercial transport to appropriate medical treatment facilities, or to transport blood or human organs. Other "compassionate flights" include transporting a child to visit with a dying relative, or transporting a dying patient to return to the city of the patient's birth.

B. FAA Policy. The FAA's policy supports "truly humanitarian efforts" to provide life flights to needy persons (including "compassionate flights"). This also includes flights involving the transfer of blood and human organs. Since Congress has specifically provided for the tax deductibility of some costs of charitable acts, the FAA will not treat charitable deductions of such costs, standing alone, as constituting "compensation or hire" for the purpose of enforcement of FAR § 61.118 or FAR Part 135. Inspectors should not treat the tax deductibility of costs as constituting "compensation or hire" when the flights are conducted for humanitarian purposes.
==============================

Looks like the policy allowing the tax deduction applie to "huanitarian" flights, not just flights to benefit a charity.

(And yes, I also log the time I do Angel Flights)

 

[Murdoughnut]

There is a group of two FAA Legal Opinions and an FAA Order that deals with Angel Flight and similar organizations. Originally, FAA Legal said that the deduction was compensation and Angel Flight required a Part 135 operating certificate. Fortunately that answer was given to a US Senator and Legal reversed itself, but on "policy" not "legal" grounds (the oriignal opinion was probably correct).

The current official policy is in Air Transportation Operations Inspectors Handbook, FAA Order 8400.10, Vol. 4, Chap. 5, Sect. 1, Para 1345

==============================
1345. FAA POLICY REGARDING "COMPENSATION OR HIRE" CONSIDERATIONS FOR CHARITABLE FLIGHTS OR LIFE FLIGHTS. Various organizations and pilots are conducting flights that are characterized as "volunteer," "charity," or "humanitarian." These flights are referred to by numerous generic names, including "lifeline flights," "life flights," "mercy flights," and "angel flights." These types of flights will be referred to as "life flights" in this section.

A. Purposes for Life Flights. The types of organizations and pilots involved with or conducting life flights vary greatly. The most common purpose of life flights is to transport ill or injured persons who cannot financially afford commercial transport to appropriate medical treatment facilities, or to transport blood or human organs. Other "compassionate flights" include transporting a child to visit with a dying relative, or transporting a dying patient to return to the city of the patient's birth.

B. FAA Policy. The FAA's policy supports "truly humanitarian efforts" to provide life flights to needy persons (including "compassionate flights"). This also includes flights involving the transfer of blood and human organs. Since Congress has specifically provided for the tax deductibility of some costs of charitable acts, the FAA will not treat charitable deductions of such costs, standing alone, as constituting "compensation or hire" for the purpose of enforcement of FAR § 61.118 or FAR Part 135. Inspectors should not treat the tax deductibility of costs as constituting "compensation or hire" when the flights are conducted for humanitarian purposes.
==============================

Looks like the policy allowing the tax deduction applie to "huanitarian" flights, not just flights to benefit a charity.

(And yes, I also log the time I do Angel Flights)

Interesting - thanks. As a matter of practicality, though - how would the FAA know by looking at my log book which flights were used as a tax deduction? I mean, is the FAA ever going to request my tax records? Unless I make a note of the purpose of the flight in my log book, who would even suspect?

 

[MidlifeFlyer]

Interesting - thanks. As a matter of practicality, though - how would the FAA know by looking at my log book which flights were used as a tax deduction? I mean, is the FAA ever going to request my tax records? Unless I make a note of the purpose of the flight in my log book, who would even suspect?

Unless someone makes a point of being a jerk about it, there's an awful lot the FAA never gets to know. Gray 135 operators, student pilots who carry passengers, pilots who fly without a medical, pilots who fly unairworthy aircraft, pilots who pad their logbooks. The list goes on.

It's usually when something happens that the investigation starts. An accident, the real 135 operator who sees, the passenger who had a bad ride.

But even assuming zero risk of being caught, there's a personal decision to make. You need to decide whether the rule you are going to intentionally break is important enough to reflect on your character. (How's that for a non-moralistic way of putting it?)

 

[Murdoughnut]

Unless someone makes a point of being a jerk about it, there's an awful lot the FAA never gets to know. Gray 135 operators, student pilots who carry passengers, pilots who fly without a medical, pilots who fly unairworthy aircraft, pilots who pad their logbooks. The list goes on.

It's usually when something happens that the investigation starts. An accident, the real 135 operator who sees, the passenger who had a bad ride.

But even assuming zero risk of being caught, there's a personal decision to make. You need to decide whether the rule you are going to intentionally break is important enough to reflect on your character. (How's that for a non-moralistic way of putting it?)

I see what you're saying - absolutely. But I'm just looking to do some good while building time - I think I should be able to write that off. Hell, I could charge the Scouts 1/2 of my direct flight costs and that would be legal, but I'm not. This seems like one area where I'd have to give "the man" the finger and roll the dice. But I completely understand where you're coming from.

 

[MidlifeFlyer]

Hell, I could charge the Scouts 1/2 of my direct flight costs and that would be legal,

Unfortunately, no it wouldn't. I sure wish the FAA would start testing the rule about sharing costs by going beyond the words in the FAR and including how it's been interpreted by the FAA and in NTSB decisions revoking pilot certificates for violating it.

==============================
the FAA has interpreted 61.118(b) so that the only allowable share-the-costs operations are those which are bona fide, that is, joint ventures for a common purpose with the expenses being defrayed by all passengers and the pilot. Nor does Section 61.118 permit pilots who want to build up time toward their commercial pilot certificates to carry expense sharing passengers to a destination at which they have no particular business.(1985 FAA Legal Opinion)
==============================

My favorite version of the rule (because the example makes it crystal clear) was in an FAA Legal Opinion in 1977 (yep, 20 years ago and CFIs still don't teach it!!). A pilot asked whether he could share the expenses with a political candidate who he wanted to fly around for the campaign. You'd think that since both the candidate and the pilot seemed to have a common interest in getting the guy elected, it would fit the bill. But in saying no, the FAA Legal Counsel said

==============================
to come within the exception to FAR 61.118(b), the flight must constitute a joint venture and there must be an equal sharing of the operating expenses of each flight between the pilot and all the passengers involved. Since the candidate would be paying for the total gasoline cost and it is not a joint venture (you are not running for office), this operation would also be in violation of FAR 61.118.
==============================

(BTW, FAR 61.118 used to be the FAR with the rule; there was change in the numbering system some time back but the substance of the rule didn't change)

 

[Murdoughnut]

Wow - the FAA are some F'ers. I had no idea they interpreted the shared expense provision as such. Crazy.

 

[MidlifeFlyer]

Wow - the FAA are some F'ers. I had no idea they interpreted the shared expense provision as such. Crazy.

Look at it this way. They are trying to accomplish 3 things: (1) protect the unknowing public who doesn't have a clue whether you are a god pilot or a bad one by making sure that if you are flying people around for their purposes you at least went through the process of getting a commercial pilots license and, in most cases of public availability, a Part 135 operating certificate; (2) protectthe investment of those who went through the hoops from those who would like do get the benefits without the investment; and (3) make loopholes that "smart" people think of to get around the rules very unattractive.

Arguably it goes too far at times. Your situation may be a good example - you want to provide a a charitable service with a very small benefit for yourself. But (1) as a patient, don't you want to think that your surgeon has gone to med schools and been properly licensed even though you know nothing about medicine; (2) as a licensed hair stylist who spent money for training and licensing, that you don't have to deal with competition from someone who did not; and (3) as wither want to know that the chances of someone sliding by ona loophole is limited?

 

[Minnesota_Flyer]

Unfortunately, no it wouldn't. I sure wish the FAA would start testing the rule about sharing costs by going beyond the words in the FAR and including how it's been interpreted by the FAA and in NTSB decisions revoking pilot certificates for violating it.

==============================
the FAA has interpreted 61.118(b) so that the only allowable share-the-costs operations are those which are bona fide, that is, joint ventures for a common purpose with the expenses being defrayed by all passengers and the pilot. Nor does Section 61.118 permit pilots who want to build up time toward their commercial pilot certificates to carry expense sharing passengers to a destination at which they have no particular business.(1985 FAA Legal Opinion)
==============================

My favorite version of the rule (because the example makes it crystal clear) was in an FAA Legal Opinion in 1977 (yep, 20 years ago and CFIs still don't teach it!!). A pilot asked whether he could share the expenses with a political candidate who he wanted to fly around for the campaign. You'd think that since both the candidate and the pilot seemed to have a common interest in getting the guy elected, it would fit the bill. But in saying no, the FAA Legal Counsel said

==============================
to come within the exception to FAR 61.118(b), the flight must constitute a joint venture and there must be an equal sharing of the operating expenses of each flight between the pilot and all the passengers involved. Since the candidate would be paying for the total gasoline cost and it is not a joint venture (you are not running for office), this operation would also be in violation of FAR 61.118.
==============================

(BTW, FAR 61.118 used to be the FAR with the rule; there was change in the numbering system some time back but the substance of the rule didn't change)

How does that letter co-exist with 91.321 (carriage of candidates in elections)?

91.321(a) As an aircraft operator, you may receive payment for carrying a candidate, agent of a candidate, or person traveling on behalf of a candidate, running for Federal, State, or local election, without having to comply with the rules in parts 121, 125 or 135 of this chapter, under the following conditions:

(1) Your primary business is not as an air carrier or commercial operator;

(2) You carry the candidate, agent, or person traveling on behalf of a candidate, under the rules of part 91; and

(3) By Federal, state or local law, you are required to receive payment for carrying the candidate, agent, or person traveling on behalf of a candidate. For federal elections, the payment may not exceed the amount required by the Federal Election Commission. For a state or local election, the payment may not exceed the amount required under the applicable state or local law.

(b) For the purposes of this section, for Federal elections, the terms candidate and election have the same meaning as set forth in the regulations of the Federal Election Commission. For State or local elections, the terms candidate and election have the same meaning as provided by the applicable State or local law and those terms relate to candidates for election to public office in State and local government elections.

[Doc. No. FAA–2005–20168, 70 FR 4982, Jan. 31, 2005]