August 2008 Issue
Forming a Corporation: Works Well For Groups
Don’t expect liability protection just because your name isn’t on the registration. A corporation may help at tax time—but only if handled correctly.
Prospective aircraft buyers must decide how to structure the ownership of the airplane. For an individual, the options are to put it in the owner’s name or to form a corporation to own the airplane. with the individual as the sole shareholder. (An L.L.C. is so nearly identical that we’ll use the word corporation to cover both.) If there is to be more than one owner, the aircraft may be owned as a partnership, with each owner’s name showing on the registration, a limited partnership (so rare in general aviation that we’ll ignore it here) or as an asset of a corporation with the owners being shareholders. The quick and dirty advice for which is best is simple: For an individual, a corporation does not provide any advantage unless the owner/pilot is doing significant charitable flying (medical mercy, environmental, etc.) and wants to use the available tax deduction for renting the airplane to him or herself. For group ownership, a corporation provides benefits that are worth exploring if the owners are willing to do the paperwork, reporting and file the required tax returns.
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