Billable expenses under FAR 91

[wtrav8r]

Hey All-

I was just searching 91.501 interpertations and came across a few threads, however, I decided to start another.

I have been interviewing with a local Company for a Lead Pilot position (no job offer yet) & today they mentioned few things that causes concern for me.

Background info:
A private Corporation owned by 4 individuals have purchased a light jet to be used 90% Business & 10 % personal.


Question 1:
The Flight Coordinator mentioned today that we will need to work on a system so she could track the 'Billable' items when the Plane is being used for Personal use (1 of the 4 Principals). If a TimeShare Agreement is in place, are the items in 91.501 (d) applicable for billing and not cross over into any 135 issues??

Question 2:
These 4 individuals plan to travel to other Companies (Board Meetings) and wish to Bill those Companies for their travel expenses. Would this be considered 135?


Before I would accept the position, I would be doing more due dillengence on this. Also, suggesting (if they haven't already) consulting an Aviation Attorney.

I would truly appreciate everyones thoughts on this matter.

WTRAV8R

 

[rettofly]

Hey All-

I was just searching 91.501 interpertations and came across a few threads, however, I decided to start another.

I have been interviewing with a local Company for a Lead Pilot position (no job offer yet) & today they mentioned few things that causes concern for me.

Background info:
A private Corporation owned by 4 individuals have purchased a light jet to be used 90% Business & 10 % personal.


Question 1:
The Flight Coordinator mentioned today that we will need to work on a system so she could track the 'Billable' items when the Plane is being used for Personal use (1 of the 4 Principals). If a TimeShare Agreement is in place, are the items in 91.501 (d) applicable for billing and not cross over into any 135 issues??

Question 2:
These 4 individuals plan to travel to other Companies (Board Meetings) and wish to Bill those Companies for their travel expenses. Would this be considered 135?


Before I would accept the position, I would be doing more due dillengence on this. Also, suggesting (if they haven't already) consulting an Aviation Attorney.

I would truly appreciate everyones thoughts on this matter.

WTRAV8R

Looks to me like the Flt Coord is simply looking for a way to allocate DOC among the partners. As for traveling to board meetings, the Fed guidelines say you can charge the price of a first class ticket to the company without any special recordkeeping other than verifying the price.

I don't see any Part 135 or 91(k) implications here. It's simply a partnership for cost sharing purposes.

 

[Lead Sled]

Hey All-

I was just searching 91.501 interpertations and came across a few threads, however, I decided to start another.

I have been interviewing with a local Company for a Lead Pilot position (no job offer yet) & today they mentioned few things that causes concern for me.

Background info:
A private Corporation owned by 4 individuals have purchased a light jet to be used 90% Business & 10 % personal.


Question 1:
The Flight Coordinator mentioned today that we will need to work on a system so she could track the 'Billable' items when the Plane is being used for Personal use (1 of the 4 Principals). If a TimeShare Agreement is in place, are the items in 91.501 (d) applicable for billing and not cross over into any 135 issues??

Question 2:
These 4 individuals plan to travel to other Companies (Board Meetings) and wish to Bill those Companies for their travel expenses. Would this be considered 135?


Before I would accept the position, I would be doing more due dillengence on this. Also, suggesting (if they haven't already) consulting an Aviation Attorney.

I would truly appreciate everyones thoughts on this matter.

WTRAV8R

I've been in this business a long time and the more that I'm around it, the more I come to realize how little I really know. After 40 years, you'd think I would understand forwards and backwards, inside and out what you can and cannot do with an airplane before it becomes a part 135 operation. I don't - well at least not any more.

We used a aviation attorney to set up the dry-lease arrangement under which we operate our airplane. I thought that it would be a pretty straighforward situation. It was actually pretty complex, having insurance, Operations Specifications (RVSM, MEL, and airspace authorizations), and FAA notification implications. Long story short, if it's to be done correctly it can be a pain in the arse - however, it's definately not the pain the getting a 135 certificate is.

Along these same lines, we were approached by the boss to see if we could do some simple "time sharing" recently. Remembering some of the discussions that took place with the attorneys when we were setting up the dry-lease, I called upon them again. [The guy we use is a recognized expert in aviation law and has written several articles that have appeared in various aviation publications as well as being a part-time FlightSafety sim and groundschool instructor - he knows his stuff.] It turns out that all is not as simple and straight forward as it might appear from simply reading the regs. It's doable, but in the real world of FAA interperations, you don't have as much latatude as you might think and there are some definate snares and "gotchas". (If it walks like a duck, quacks like a duck...)

Bottom line is this...
A lot of us think that we understand what can and can't be done under 91. The problem is that we really don't. The FAA doesn't have the staffing to have inspectors out under every rock observing our various comings and goings - thankfully! Unfortunately this leads to a situation where guys come to believe that what they're doing is OK; after all, "We've been doing it this way for years and no one's ever said anything about it before..." Things like this are never a problem, until there is a problem; that's when the FAA and the insurance companies take out their microscopes and anal probes. At that point, it's too late. When it comes to the FAA (and the IRS) you're guilty until you can prove yourself innocent.

My recommendation to you if you get the job is to get a hold of a competent, experienced aviation attorney to help you set up what ever program do decide fits best into your particular operation. It shoudn't cost a lot of money.

LS

 

[G4G5]

Question 1:
The Flight Coordinator mentioned today that we will need to work on a system so she could track the 'Billable' items when the Plane is being used for Personal use (1 of the 4 Principals). If a TimeShare Agreement is in place, are the items in 91.501 (d) applicable for billing and not cross over into any 135 issues?

It depends upon who you talk to. Talk with 10 different aviation directors and my guess is that you will get 4 different answers. Three will say it's business, Three will say it's personal. Two will come up with some wild line of BS and two more will go, "what are you talking about"?

I know of one Fortune 10 company that says, yes without a doubt it's company business. They look at it that even if the CEO is serving on another board he is still "learning something valuable for his company". Which under their philosophy allows them to say that it is company business.

I know of another company that says, "it does not enhance our share holder value and the CEO personally gains financially" that makes it personal.

The problem is not, how you or I view it, that's like arguing Coke or Pepsi. The question is, how does the SEC view it? If your boss interprets it as business and then the SEC says, No then your boss needs to refile his taxes and the company needs to refile it's SEC paperwork which in-turn makes the cover of the WSJ and the top of the hour news on CNBC's morning call, if your company is big enough.

Bottom line, your ass is on the line. How PO'd is your boss going to be if the SEC tells him he needs to pay a penalty and refile his taxes?

Question 2:
These 4 individuals plan to travel to other Companies (Board Meetings) and wish to Bill those Companies for their travel expenses. Would this be considered 135?


From what I have been told if they want a "bill" then it's 135 if they want to take it off there taxes as business then a 501 will suffice.



Before I would accept the position, I would be doing more due dillengence on this. Also, suggesting (if they haven't already) consulting an Aviation Attorney.

I would suggest calling the NBAA's tax folks. Get a grasp of the situation and then more importantly get your internal tax folks involved. You need to have them on the same page and vice versa. Sarbox is now making this front page news, the days of just offering somebody a ride are long gone or every trip is "business" are over.

 

[IronManNDFW]

WTRAV8R:

You stated: "I have been interviewing with a local Company for a Lead Pilot position (no job offer yet)."

Then you start into to a complex mindfornication of how to charge this and that.

My Pal look at your comment above. They are asking you to figure something out for them for free. What's to say that you come up with an answer and they don't hire you! It's happened.

Before I'd invest more time and resources, trying to solve their problem, I'd either ask to be hired as a aviation consultant to resolve this issue or to be hired as the lead pilot, and I'll continue to work on theissue. This wayyou get paid to do what you are doing now for them for free.

Now back to the mindfornication issue, Does the company not have a Chief Pilot? Dir of Ops? Sounds like this is thier job, and not the one of a pilot. If theyhave neither then it is time you bacame one of those! Your job as a pilot is to sit in the pointy end and fly the airplane, not to resolve such mindforincation as this. Remember you not getting paid to do this, and as much as I know in my heart "you just trying to help them out, and make it look good (like cooperation) so that you MAY get the job," you have nothing t bargain with.

What if you come up with an answer they don't like? They haven't hired you so.....

Does the company have a attorney on retainer? Why areen't they asking the attorney the question? If you look at the FAR's they begin with "Titles 14 and 49 Code of Federal Regulations." When most attornies see this, they become real interested in what is going on, and who has responsibility for what.

This "Flight Coordinator" has put you in a sticky wicket. This person has asked you to answer a legal question, and you're not an attorney (at least not stated) and you're not getting paid. STOP WHORING YOURSELF! That is one of the major problems in this industry. Go back and read above about resolving this for them and getting paid.

You are also asking for an opinion. Like G4G5 said ask and you will recieve many different opinions.

My question is is the aircraft in it's own seperate company? If it is then just make it all 135 and let the accountants worry about the charges.

If the 4 principles want to keep it as their own toy, then bigger problems arise.

You will need someone who is better versed on these issues then the fine folks you will find here. G4G5 told you most of them. Do you really want to go asking for opinions of how the IRS will treat this without a good Tax Attorney doing the asking? Do you want to go ask the SEC about how this will be treated without the CFO involved? God knows you don't want to askteh FAA anything, but wouldn't it be better if the CP or DO asked this question f the FAA?

I just think that is asking you to go way above and beyond what a pilots position is. It is not your job to go solving these questions as a pilot.

Take it from one who has "been there done that." Never again without a contract or getting paid, and at that not without the asistance of you're companies other teams of professionals!"

My .02