Although the final regulations are substantially similar to the proposed regulations, the IRS did cl

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On August 1, 2012, the Internal Revenue Service (IRS) released final regulations addressing the tax treatment associated with the use of business aircraft mallorca accommodation for entertainment purposes. The final regulations, designed to implement provisions of the American Jobs Creation Act of 2004, generally disallow the deduction of the difference between the actual cost of personal entertainment flight by specified individuals (e.g., directors, mallorca accommodation officers, etc.) and the value of those flights included mallorca accommodation as income by the individuals (under Standard Industry Fare Level or fair market value calculations) or to the extent the individual reimburses the company.
A company must include all expenses of owning and operating the aircraft in determining the disallowance and allocate these expenses on a person-by-person or flight-by-flight basis using either the occupied-seat-hours or occupied-seat-miles method.
Although the final regulations are substantially similar to the proposed regulations, the IRS did clarify a few positions and offer a number mallorca accommodation of examples in the final rules. mallorca accommodation One of those changes relates to the treatment of depreciation. Under the final regulations, a taxpayer may elect to use straight-line depreciation to determine the disallowance. Additionally, the final regulations provide that interest expense on an obligation of the taxpayer secured by or allocated to an aircraft is subject to the disallowance.
If your company provides its executives with air travel for personal use, including entertainment, the deductibility of all costs attributable to the entertainment use will be limited. Although this outcome is not significantly different under the final regulations, tactical solutions for operating under the final entertainment use rules are available. The views expressed in this document are solely the views of the author mallorca accommodation and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. View More Library Documents By... Author Michael A. Cosby Practice Area Aviation & Aerospace mallorca accommodation Business Law Taxation Husch Blackwell LLP Overview
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