LLC?

3 Replies

LLC?

Posted by Philip Johnson on Dec 3, 2018 8:31 am

My partner and I have co-owned a Cherokee six for at least 20 years.  The partnership has been great.  He has a child who just learned to fly.  And that has changed things a little bit.

The prospect of this low time VFR pilot flying the airplane has renewed my interest in putting title to the airplane into an LLC.  Where this is an airplane for personal and recreational use only and where the only people flying are members of the LLC and where the only income LLC has is reimbursement from the pilots for actual expenses, is there any regulatory risk that the FAA will say it is a commercial operation? Also, I understand the LLC will have to file a separate federal tax return each year, but there should be no tax, right?

Re: LLC?

Posted by Ronald Levy on Dec 3, 2018 9:56 am

Given your description of the operation, there is no risk the FAA will call it a "commercial operation".  And yes, the LLC will have to file both Federal and state tax returns every year, as well as doing a lot of other things corporate entities must do.  You should talk to an attorney and a tax professional familiar with such deals to understand all the implications and actions needed.  If you're an AOPA Legal Services subscriber, you can get an initial consultation free through that service.  You can get a good general understanding of the issue by reading the relevant chapters of J. Scott Hamilton's "Practical Aviation Law", widely available on the internet.

Re: LLC?

Posted by Richard Campbell on Dec 10, 2018 8:44 am

You are creating a Flying Club.  My EAA chapter just did this, by creating a separate and distinct legal entity and bought an airplane owned by the club.  AOPA and EAA have lots of good info and support for forming a flying club.

Re: LLC?

Posted by Steve Pfeiffer on Dec 10, 2018 10:03 am

In addition to the expenses of forming the LLC, you might also want to investigate whether or not the state the airplane is registered in will require sales tax to be paid when the airplane is "sold" by you and your partner to the LLC.