Dash Power
Well-known member
- Joined
- Mar 27, 2006
- Posts
- 348
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The advice I got from a lawyer is to incorporate the airplane as a legal entity. When it crashes its possible to sue everyone who ever owned the machine for negligence in maintaining it. They'd try to sue a corporation that has no assets. It's somehow a big jump to sue the owners of a corporation -- not that it can't be done. When the Sundowner I previously owned was crashed at a flight school I had no worries. Google N9194S 1/22/09 for details.
AOPA has some good advice on their website, including (I think) a sample agreement. Key items include abnormal wear and tear, since renters won't be as gentle with it as you are. Also, consider the tax implications of engaging in a "rental activity" if a tax break is any concern.
The advice I got from a lawyer is to incorporate the airplane as a legal entity. When it crashes its possible to sue everyone who ever owned the machine for negligence in maintaining it. They'd try to sue a corporation that has no assets. It's somehow a big jump to sue the owners of a corporation -- not that it can't be done. When the Sundowner I previously owned was crashed at a flight school I had no worries. Google N9194S 1/22/09 for details.
I used an S corp. If you actually make a profit it gets taxed once as personal income (sort of). Likewise, if you take a loss it's just negative income, not a tax deduction. In a C Corp the corporation pays taxes and the owners pay additional taxes on any income given to them as dividends. So for an S Corp you do the corporate tax return, mail in the forms and enter the numbers on the income section of your 1040. For the C Corp you do the corporate tax return, send in the forms with a check to Uncle Sam, enter the numbers on your 1040 and pay taxes again.
To do it all again I would seriously consider a LLC. Depending on the state, it's probably less paperwork hassle and cost to establish the corporate entity. Also, the taxes are easier to figure out and file. I think you can do the taxes on a schedule C like a sole owner proprietorship--someone will correct me if I'm wrong.