aircraft are used for a personal trip every now
and then. This personal use will generally have
consequences on the company and on the employee.
TO THE EMPLOYEE
The employee will
generally be required to treat the value of the
personal use as additional compensation [see The SIFL Rules].
TO THE COMPANY
use should not have a tax impact on the company,
as long as the use is properly reported.
(Although the IRS has disallowed deductions
associated with the cost of flying customers to a
hunting lodge.) Frequent personal use of a
company aircraft can lead to problems with
claiming deductions, particularly if business
useage to drop to less than 50%. In the worst
case, the IRS could argue that the principal
stockholder has received a "constructive
dividend", which would result in income to
the stockholder and no deduction for the company.
attempt to limit personal use by charging for the
use of the aircraft. However, according to the
FAA, such charges for transportation are not
allowed under Part 91. One solution is to use a
time-share agreement, but this is not always