1. Aircraft Ownership Decisions Cannot Be Made in Silos
Tax, legal, and operational decisions are deeply connected. When those conversations happen independently, problems tend to surface later during audits or enforcement actions.
“Aircraft ownership is one of the few areas where FAA rules and IRS rules overlap but don’t always align,” Katie Simmons, Director of Tax Controversy and Procedure at Forvis Mazars. “If those rules aren’t coordinated upfront, owners can unintentionally create compliance issues.”
Owners benefit most when aviation counsel, tax advisors, lenders, insurers, and aircraft management are aligned from the beginning.
2. Ownership and Operating Structure Set the Tone for Compliance
How an aircraft is owned and operated determines tax treatment, liability exposure, and regulatory oversight. The ownership structure is not just a legal formality, it will impact many aspects of your ownership experience.
“If you don’t engineer the structure upfront, you’re not properly managing the risk,” Simmons noted. “When your blueprint for compliance is flawed from the start, everything else will just be damage control.”
Even small changes in how the aircraft is used can push an operation from compliant to noncompliant without the owner realizing it.
3. Cost Sharing Is One of the Most Misunderstood Risk Areas
“Cost sharing is where we see a lot of well-intentioned owners get into trouble,” Simmons added. “The FAA looks at substance over structure, not what the agreement says on paper.”
Imagine this scenario: An executive reimburses the company $5,000 for a personal weekend trip. The FAA sees illegal charter. The insurance denies a claim. The pilot’s certificate is also at risk, all from one ‘simple’ reimbursement.
4. Personal and Entertainment Use Has Broad Tax Consequences
Personal and entertainment use of an aircraft affects more than one tax line item. It impacts how income is reported, whether operating costs stay deductible, and how depreciation applies to the aircraft as a whole. Every passenger on every flight must be classified correctly, and those details matter. Leisure and entertainment trips can limit deductions for expenses, depreciation, and interest, even if most flying is for business.
Consider when a CEO flies to meet clients Monday through Thursday, then detours to a ski resort Friday. That single personal leg can disqualify the entire week’s depreciation deduction, triggering recapture on years of write-offs.
5. Bonus Depreciation Requires More Than Timing
While 100 percent bonus depreciation has returned, the panel cautioned that eligibility is not automatic.
“Bonus depreciation is powerful, but it’s also highly technical,” said Robert Davis, Aviation Partner at Forvis Mazars. “It depends on qualified business use, delivery timing, and how the aircraft is actually flown.”
Failing usage thresholds in later years can trigger depreciation recapture, turning a powerful upfront deduction into a future tax liability. Even when bonus depreciation and usage tests are met, other sections of the tax code can limit the ability to use aircraft‑related losses.
6. Enforcement Is Data-Driven
More than ever before, there is a more aggressive and coordinated enforcement environment. IRS and state auditors now routinely analyze flight tracking data, hangar logs, and third-party records. Sales, use, and property taxes are commonly underestimated, but can surface years later with compounding penalties.
“Aircraft audits are no longer isolated events,” Simmons shared. “They’re data-driven and often multi-jurisdictional.”
