Program Schedule – 2023 NBAA Business Aviation Taxes Seminar

5:30-7:30 p.m.

Networking Reception

Rooftop at Torali (12th floor) – The Ritz-Carlton

8 a.m. – 5 p.m.

Registration

St. Clair Foyer – The Ritz-Carlton

8-9 a.m.

Continental Breakfast

Lakeside – The Ritz-Carlton

9-9:10 a.m.

Welcome & Introduction

9:10-10 a.m.

Overview of the Gray Areas: Tax and FAA Regulatory Complexities

Lori McGee, Jetstream Aviation Law, P.A.
Jeff Wieand, Boston JetSearch, Inc.

Achieving an FAA-compliant structure and meeting tax goals requires you to carefully thread the needle between requirements that do not perfectly align. In this session the presenters will outline the gray areas between FAA and tax requirements and introduce strategies to address those gray areas.

• Discuss the relationship between IRS and FAA regulatory frameworks and the impact on tax planning strategies.
• Analyze the differences between FAR Part 91 and 135.
• Analyze various gray areas, such as flight sharing, share ownership and the flight department company trap.
• Preliminary discussion on permissible leasing structures.

10-10:50 a.m.

Aircraft Leasing Complexities

Robert Davis, FORVIS LLP
David Hernandez, Vedder Price PC

The seemingly benign aircraft dry lease can bring on a multitude of complexities regarding the FAA and IRS regulations. This session will examine the relevant tax and operational control considerations related to the lessor and lessee, the innocent “sharing” of aircraft combined with reimbursements and the joint use of aircraft by multiple parties. The panel will cover commonly overlooked risks as well as the interaction of the Section 280F “business of leasing” and the Section 274(e)(8) “adequate and full consideration” exceptions. The significance of FAA operational control will also be addressed along with the rules related to the disallowance of lessee expenses when the 25% test is not passed by the lessee.

• Explain the relevant FAA and tax concerns and gray areas.
• FAA and tax concerns relating to shared and joint use of aircraft.
• Analyze the application of the exceptions to the listed property rules provided in IRC Sec. 280F(c)(1) and the entertainment use disallowance provisions provided in IRC Sec. 274(e)(8) in connection with lessor/lessee activities and deductions, particularly when the parties to an aircraft lease are separate taxpayers.
• Explain how IRC Sec. 280F(c)(2) through (4) operates for aircraft lessees.
• Discuss FAA issues such as the transfer of operational control.

10:50-11:15 a.m.

Morning Break

11:15 a.m. – 12 p.m.

Aircraft Depreciation Gray Areas: 100% Bonus Is Going Away, So Now What?

David Shannon, Lewis Brisbois Bisgaard & Smith LLP
Chris Younger, Crowell & Moring LLP

Effective planning to secure business aircraft tax depreciation deductions requires a detail-oriented approach and analysis when structuring ownership and operations. This panel will provide an opportunity to learn about key structuring and drafting considerations, potential operational pitfalls and recent developments that add more gray areas than clarity.

• Explain the current status of bonus depreciation including the phase down schedule.
• Does depreciation drive federal income tax planning? Should it?
• Discuss aircraft MACRS requirements and alternative options.
• What are the most common limitations on claiming depreciation deductions?
• What do you mean I didn’t qualify for 100% bonus depreciation, but I have a “Certain Aircraft?”
• Review depreciation “worst practice” hypothetical.

12-1:15 p.m.

Lunch

Lakeside – The Ritz-Carlton

1:15-2 p.m.

Compliance Best Practices for Commuting Deduction Disallowance

Sue Folkringa, Aviation CPAs
Joe Park, BIZJETCPA

This session will review the law regarding commuting flights and how to apply the law to real life flight scenarios. The panelists will identify company structures and flight patterns that could lead to classification of flights as commuting and demonstrate the resulting tax implications.

• How does the disallowance on commuting deductions under IRC Sec. 274(l) create challenges for aircraft owners?
• Review best practices to comply with the final rules and planning opportunities to manage potential disallowances.
• Does this disallowance require changing or reviewing aircraft use policies?
• Review deduction disallowance hypothetical example.

2-2:45 p.m.

Why Aircraft Owners May Owe Federal Excise Taxes and Don’t Realize It

Ryan DeMoor, MySky
Melissa Stanley, Barbera & Watkins, LLC

This panel will review what payments are subject to Federal Excise Taxes (FET), especially when operations are conducted under the various exceptions in FAR Part 91 that allow for reimbursement. Panelists will also discuss the requirements for the collection of FET on payments for aircraft management services and when charter brokers are involved.

• Review of final FET exemption for aircraft owner payments to management companies, how this works in practice and opportunities it provides.
• Analyze the gray areas associated with the “aircraft owner” definition (IRC Sec. 4261(e)(5) and related regulations) and aircraft leasing arrangements.
• Discuss the issues associated with non-affiliated groups, time sharing and interchange agreements and other third-party arrangements.

2:45-3:10 p.m.

Afternoon Break

3:10-4 p.m.

Regional State Sales and Use Tax Planning for Aircraft Owners

Mike Grim, Mountjoy Chilton Medley LLP
Nel Stubbs, Conklin & de Decker Associates, Inc., a JSSI Company

This session will make clear the importance of considering various states taxes when planning an aircraft transaction or choosing where to base or maintain an aircraft. Panelists will compare the various exemptions available in the region and highlight states that are considering changes to their tax laws.

• Review state tax basics: How does sales/use tax work? Why do use tax considerations continue to be relevant after an aircraft purchase is completed?
• Analyze regional differences (Illinois, Wisconsin, Indiana, Michigan and Ohio) and review the requirements.
• When should sales tax planning be accomplished? What is the impact on the transaction process and post-closing requirements?
• Discuss unique state tax issues including how to handle groups of buyers and co-owners that could be in different states.

4-4:50 p.m.

Other Gray Areas That You Should Be Aware of in 2023

Katie DeLuca, Harper Meyer
John Hoover, Holland & Knight LLP
Ehsan Monfared, YYZlaw
David Norton, Shackelford, Bowen, McKinley & Norton, LLP

This session will provide a general overview of issues affecting both US and non-US operators in connection with operations both within the US and abroad. The panelists will address, among other things, (i) the FAA’s on-going crack down on improper dry leasing and alleged “illegal charter” operations, how these situations are occurring and risk-mitigation strategies operators should consider; (ii) a review of tax recordkeeping requirements for business aircraft; (iii) US sanctions updates for Russia and other volatile regions; (iv) US tax considerations that non-US taxpayers should be aware of when operating business aircraft within the US; and (iv) Canadian tax considerations operators of business aircraft should be aware of when operating aircraft in Canada.

• Review preparations for an IRS audit or FAA enforcement action.
• Learn about documentation and substantiation recommendations and what’s right for specific operations.
• Consider international concerns (Russia/Belarus sanctions, tax and foreign income considerations).
• Explain what you need to know about flying to/from Canada.
• Update on FAA leasing enforcement updates, recent enforcement issues and risk mitigation strategies.

4:50-5 p.m.

Additional Time for Q&A