turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Deducting Pilot Training Expenses for a New Charter Business LLC

Hello experts!


I am planning to start a flying charter business and am currently undergoing pilot training to obtain the necessary certifications, such as instrument flying and commercial certifications. I have not yet formed an LLC for my business, as I thought it would be prudent to complete my training first before officially starting the business.


If I were to establish an LLC tomorrow, would I be able to deduct the expenses associated with my pilot training as business expenses, even though I do not expect to generate revenue for the next year?


Thank you for your insights!

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions
KimberW
Employee Tax Expert

Deducting Pilot Training Expenses for a New Charter Business LLC

No, there is a difference between education expenses and other types of business expenses.

 

To add a little to mirthaguer's answer above about education expenses -- education expenses are divided between deductible business expenses and personal education expenses. If the expense doesn't count as deductible for the business, then it may still qualify for any of the education credits available on your individual return. The IRS publishes an interactive interview that will walk you through determining if an education expense is "work-related" or not. You can find an overview of the requirements at Topic no. 513, Work-related education expenses. That page also includes a link to the Are my work-related education expenses deductible? interactive tax assistant.

 

The other kinds of "start-up" expenses that you ask about in your follow-up, though, are not treated the same way as the education expenses. Your business will likely incur expenses before it is actually ready to start providing services to the public. Those expenses must generally be deducted over time (amortized or depreciated) rather than being deducted all at once at the time of the expense.

 

Equipment or assets that you purchase before the business begins operating will be depreciated over their normal lifespan, but that depreciation won't start until the month that your business begins to operate. This would include computers, software, and even the aircraft you mentioned. The depreciable lifespan for an aircraft is anywhere from 5-12 years, depending on the type of plane and its use. There are also ways to accelerate depreciation and take most, if not all, of the expense as a deduction in the first year. (Bonus depreciation for 2024 is 80% of the total cost. Or, Section 179 can allow for a deduction of the full amount if there is sufficient revenue in the company. And you can elect to expense any item under $2,500 if you do so consistently.)

 

Non-asset start-up expenses (ramp fees, stocking office supplies, printing advertising brochures, etc.) are generally deducted over time (amortized). The amortization period is 15 years and it begins the month that your business begins to operate. Your business may be able elect to deduct up to $5,000 of start-up expenses in the year it begins operating, rather than amortizing that amount. [This amount is reduced dollar for dollar if your total start-up expenses exceed $50,000. For example, if your total start-up expenses were $50,250, then you could only elect to deduct up to $4,750 -- the maximum amount of $5,000 reduced by the $250 that your total exceeded $50,000.]

 

And there's even another category of expenses to consider -- organizational costs. These include the fees to register your company with the Secretary of State, legal fees to draft an operating agreement or shareholder agreement, obtaining a business license from the state/county/city, and other expenses necessary to actually form the company itself. As with start-up expenses, organizational costs are generally amortized over a period of 15 years. There is a similar election available to deduct up to $5,000 of organizational expenses, with that amount reduced dollar for dollar if your organizational costs exceed $50,000.

 

Starting a Business 

Start-up Business Tax Tips 

IRS Tax Tip: Here’s how businesses can deduct startup costs from their federal taxes 

 


Thank you for participating in this event!
-- KimberW

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

4 Replies
mirthaguer
Employee Tax Expert

Deducting Pilot Training Expenses for a New Charter Business LLC

I understand that you plan to start a flying school, but are taking a training to have the necessary qualifications.   To go to school to get qualified such as law school is not an allowable business expense because it qualifies you for a new profession. It  was also common accountants were going to law school and trying to get a tax deduction for law school fees.   Same applies here. You are not qualified to be in the business and you are training so that you can start a business.     The IRS said no to get qualified to enter a new business.  Once you have the required  training for your business then you will be able to deduct any expenses to maintain your certification.   

Deducting Pilot Training Expenses for a New Charter Business LLC

Thank you for your response. 

 

Will the same logic apply for purchasing an aircraft, or paying for ramp fees, etc? In order to deduct those items, I would need to wait until after I receive my required certifications?

 

Thanks again.

KimberW
Employee Tax Expert

Deducting Pilot Training Expenses for a New Charter Business LLC

No, there is a difference between education expenses and other types of business expenses.

 

To add a little to mirthaguer's answer above about education expenses -- education expenses are divided between deductible business expenses and personal education expenses. If the expense doesn't count as deductible for the business, then it may still qualify for any of the education credits available on your individual return. The IRS publishes an interactive interview that will walk you through determining if an education expense is "work-related" or not. You can find an overview of the requirements at Topic no. 513, Work-related education expenses. That page also includes a link to the Are my work-related education expenses deductible? interactive tax assistant.

 

The other kinds of "start-up" expenses that you ask about in your follow-up, though, are not treated the same way as the education expenses. Your business will likely incur expenses before it is actually ready to start providing services to the public. Those expenses must generally be deducted over time (amortized or depreciated) rather than being deducted all at once at the time of the expense.

 

Equipment or assets that you purchase before the business begins operating will be depreciated over their normal lifespan, but that depreciation won't start until the month that your business begins to operate. This would include computers, software, and even the aircraft you mentioned. The depreciable lifespan for an aircraft is anywhere from 5-12 years, depending on the type of plane and its use. There are also ways to accelerate depreciation and take most, if not all, of the expense as a deduction in the first year. (Bonus depreciation for 2024 is 80% of the total cost. Or, Section 179 can allow for a deduction of the full amount if there is sufficient revenue in the company. And you can elect to expense any item under $2,500 if you do so consistently.)

 

Non-asset start-up expenses (ramp fees, stocking office supplies, printing advertising brochures, etc.) are generally deducted over time (amortized). The amortization period is 15 years and it begins the month that your business begins to operate. Your business may be able elect to deduct up to $5,000 of start-up expenses in the year it begins operating, rather than amortizing that amount. [This amount is reduced dollar for dollar if your total start-up expenses exceed $50,000. For example, if your total start-up expenses were $50,250, then you could only elect to deduct up to $4,750 -- the maximum amount of $5,000 reduced by the $250 that your total exceeded $50,000.]

 

And there's even another category of expenses to consider -- organizational costs. These include the fees to register your company with the Secretary of State, legal fees to draft an operating agreement or shareholder agreement, obtaining a business license from the state/county/city, and other expenses necessary to actually form the company itself. As with start-up expenses, organizational costs are generally amortized over a period of 15 years. There is a similar election available to deduct up to $5,000 of organizational expenses, with that amount reduced dollar for dollar if your organizational costs exceed $50,000.

 

Starting a Business 

Start-up Business Tax Tips 

IRS Tax Tip: Here’s how businesses can deduct startup costs from their federal taxes 

 


Thank you for participating in this event!
-- KimberW

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Deducting Pilot Training Expenses for a New Charter Business LLC

Kimber,

 

Thank you for taking the time to explain in detail how to handle deductions related to education/training and start-up costs associated with launching a new business.

 

Your insights were incredibly valuable and have provided me with a clearer understanding of these important matters and I will definitely review the information in the links you provided.

 

Your expertise is greatly appreciated!

 

Sincerely,

David

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies