Just wondering if anyone had any good information on what is considered a legitimate tax write off? I am mainly interested in what is a 4000 dollar breitling pilot watch that is equipped with an E.L.T. The fact that it has the only personal ELT I am aware of seems to make it a legitimate peice of safety equipment( so what if it just happens to be surrounded by a fine swiss time piece)
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tax write off on watch?
- Thread starter bigsky
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EagleRJ
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bigsky said:
LOL! In more ways than one!
I don't know if I would write off four grand for this fancy watch. The IRS will probably ask you why you couldn't have bought a commercial EPRB, which is 1/8 the cost and puts out a more powerful signal. I'm sure they wouldn't mind if you deducted an EPRB and a Timex. They weren't born yesterday.
njcapt
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bigsky said:
AB - SO - LUTELY. Any piece of equipment you use on a regular basis in your aviation job that is not reimbursed by your employer is tax deductible. Hel, I write off haircuts, shoeshines, laundry expense for my uniform shirts that I wash and iron myself, tips for van drivers, uniform pieces, my cell phone, my laptop (nearly every function at ATA is done on the web) and internet service, my AOPA and AirINC memberships (when I still was involved with that stuff), suitcases and flight bags, etc.
What is not tax deductible (and in conflict of what a number of airline pilots will tell you) is crash pad rent, commuting expense, a car in your crew base, and stripper tips on overnights (unless you engage her in conversation about PFT or Jets For Jobs).
All these items have been upheld by IRS tax courts. Have fun.
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Breitling Emergency Watch
Hey Big Sky:
Are you buying the Breitling Emergency or the Emergency Mission? The Emergency is the one with the digital window inside and comes in titanium or precious metal. The Emergency Mission just came out and it's a chronograph. I'm asking because I own one myself and my buddy is selling his because he wants the new Breitling Advenger. Breitling offers the first service free of charge. Every 2 years you have to send the watch back to breitling to get the ELT tested and serviced and the battery replaced. The watch has two separate batteries; one for the watch and one for the ELT itself.
I bought the watch new for him on an overnight in Dubai because at the time the watch was still illegal to sell in the states. It has the dark blue face with titanium casing. He just picked it up from the Breitling dealer after getting the full service from Breitling. The watch is practically brand new...not a scratch. If you're interested you can e-mail me at [email protected]
And yes, you can write it off. He wrote off an Omega SeaMaster Chronograph because it has a stop watch and he told the IRS auditor he used it to time approachs
Hey Big Sky:
Are you buying the Breitling Emergency or the Emergency Mission? The Emergency is the one with the digital window inside and comes in titanium or precious metal. The Emergency Mission just came out and it's a chronograph. I'm asking because I own one myself and my buddy is selling his because he wants the new Breitling Advenger. Breitling offers the first service free of charge. Every 2 years you have to send the watch back to breitling to get the ELT tested and serviced and the battery replaced. The watch has two separate batteries; one for the watch and one for the ELT itself.
I bought the watch new for him on an overnight in Dubai because at the time the watch was still illegal to sell in the states. It has the dark blue face with titanium casing. He just picked it up from the Breitling dealer after getting the full service from Breitling. The watch is practically brand new...not a scratch. If you're interested you can e-mail me at [email protected]
And yes, you can write it off. He wrote off an Omega SeaMaster Chronograph because it has a stop watch and he told the IRS auditor he used it to time approachs
bobbysamd
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Breitling write-off
You can try to write off anything, but my gut reaction is that writing off your Breitling is a bit too aggressive and could invite an audit. On the other hand, the IRS employs many criteria to flag returns for audits and your situation might allow you to avoid an audit.
The IRS has a number of criteria to prompt audits. High-income taxpayers are targets. I heard that those who misreport interest and dividend income are audited. By misreporting I mean that the numbers shown on returns do not match the 1099s supplied by payors. If you otherwise don't fall into the category of taxpayers most susceptible to being audited, you might get by with writing off your Breitling.
The suggestion was made that you might depreciate the watch. New watches lose a great deal of their value after being worn - perhaps up to 50% - because they are then regarded as "used" watches - but a number of watches, such as Rolexes, etc., hold their value.
I second the advice that you discuss writing off your Breitling with your tax advisor. One thing that you should do after acquiring it is have it appraised and give a copy of the appraisal to your homeowners' insurance company so the watch is insured.
Good luck, and enjoy the watch.
You can try to write off anything, but my gut reaction is that writing off your Breitling is a bit too aggressive and could invite an audit. On the other hand, the IRS employs many criteria to flag returns for audits and your situation might allow you to avoid an audit.
The IRS has a number of criteria to prompt audits. High-income taxpayers are targets. I heard that those who misreport interest and dividend income are audited. By misreporting I mean that the numbers shown on returns do not match the 1099s supplied by payors. If you otherwise don't fall into the category of taxpayers most susceptible to being audited, you might get by with writing off your Breitling.
The suggestion was made that you might depreciate the watch. New watches lose a great deal of their value after being worn - perhaps up to 50% - because they are then regarded as "used" watches - but a number of watches, such as Rolexes, etc., hold their value.
I second the advice that you discuss writing off your Breitling with your tax advisor. One thing that you should do after acquiring it is have it appraised and give a copy of the appraisal to your homeowners' insurance company so the watch is insured.
Good luck, and enjoy the watch.
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Lopaka
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Hey, you might want to look into buying it elsewhere than in the US. I saw quite a few in the Cayman's for about a grand cheaper, but ended up picking mine up in Cozumel for about $1500 less. Lots of places really want get rid of it because they've held it for so long and the market is so narrow for that specific watch, so you can talk them down. I never thought about writing it off though, that's interesting.
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ShawnC
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wingnutt said:wow, i missed this one the first time around$4,000.00 for a watch???
...am i the only one who cant grasp this?
Remember it's a fact that a pilots skill is not measured by how well he lands, but by how big his watch is.
Judging by the fact that it has an ELT built in, I would say it's probably pretty big.
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JimNtexas
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My wife is an enrolled agent, together we run a tax preperation business.
If the pilot is paid on a W-2 then we both agree that there is no way to deduct the watch. You'd have to be able to show that your employer required you have this watch. I bet most commerical operators of airplanes have clocks in the office and in the panels of the plane.
It's different if the pilot is self-employed.
My first reaction was to say that if the pilot with the fancy watch is self employed then he or she should be able to take section 179 depreciation on the watch. This would let them deduct the entire $4000 watch in the year acquired assuming the pilot had at least $4000 of income.
My wife, who is a very conservative tax preparer, says no.
She says that there have been tax court ruling against doctors and nurses who tried to depreciate watches. The court said that watches are "personal jewlery" .
I'd say ask the question and beg for forgiveness if you're wrong. She says she wouldn't let you do it if she prepared your return.
Take your pick.
If the pilot is paid on a W-2 then we both agree that there is no way to deduct the watch. You'd have to be able to show that your employer required you have this watch. I bet most commerical operators of airplanes have clocks in the office and in the panels of the plane.
It's different if the pilot is self-employed.
My first reaction was to say that if the pilot with the fancy watch is self employed then he or she should be able to take section 179 depreciation on the watch. This would let them deduct the entire $4000 watch in the year acquired assuming the pilot had at least $4000 of income.
My wife, who is a very conservative tax preparer, says no.
She says that there have been tax court ruling against doctors and nurses who tried to depreciate watches. The court said that watches are "personal jewlery" .
I'd say ask the question and beg for forgiveness if you're wrong. She says she wouldn't let you do it if she prepared your return.
Take your pick.
A Squared
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Jimntexas,
"If the pilot is paid on a W-2 then we both agree that there is no way to deduct the watch. You'd have to be able to show that your employer required you have this watch."
This differs from my understanding of deductions. I agree that a $4000 watch may be streching the definition a bit, but a work related expense does not have to be required by your employer in order for you to deduct it.
I don't have the Tax Code in fromt of me, but I do have a 2003 tax instruction booklet.
In the instructions for Schedule A Line 20 it says:
"Enter the ordinary and necessary job expenses for which you were not reimbursed. (Amounts your employer included in box 1 of your Form W-2 are not considered reimbursements)
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary "
Now, if you have case law that disallows watches for Doctors, that might also apply to pilots. That doesn't mean, however, that the only expenses you may deduct as an employee are ones specifically required by your employer.
"If the pilot is paid on a W-2 then we both agree that there is no way to deduct the watch. You'd have to be able to show that your employer required you have this watch."
This differs from my understanding of deductions. I agree that a $4000 watch may be streching the definition a bit, but a work related expense does not have to be required by your employer in order for you to deduct it.
I don't have the Tax Code in fromt of me, but I do have a 2003 tax instruction booklet.
In the instructions for Schedule A Line 20 it says:
"Enter the ordinary and necessary job expenses for which you were not reimbursed. (Amounts your employer included in box 1 of your Form W-2 are not considered reimbursements)
An ordinary expense is one that is common and accepted in your field of trade, business, or profession. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be required to be considered necessary "
Now, if you have case law that disallows watches for Doctors, that might also apply to pilots. That doesn't mean, however, that the only expenses you may deduct as an employee are ones specifically required by your employer.
JimNtexas
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I was thinking of the employee's watch as being like clothing. You can't claim uniforms or work clothes as employee expenes unless they are required by the employer and not suitable for everyday wear. For example Tax court denied an employee business expense for a member of Rod Stewert's band for his loud and flashy clothing clothing, stating that they were suitable for personal use.
(aside: I do think that a big round airline pliot wheel hat is deductable as an employee business expense. No one would wear one of those if they were not forced to.)
Reviewing the rules for employee business expenses the only fig leaf I can find for you is if you want to call your $4000 watch a "small tool". I don't think that is what the IRS had in mind though.
I see no way that you could defend putting an item that costs thousands, lasts for years and might even appreciate down as an employee business expense.
It is different for schdule 'C' filers. Many of them invest tens of thousands of dollars in tools, so a $4000 capital expense for an "aviation chronometer" on a schdule 'C' is much less likely to inflame the IRS.
The argument I made to the court of my spouse was that our expensive watch is capital, a tool that last for years and therefore can and should be depreciated by self-employed pilots. Under the current seciton 179 rules you could then depreicate the watch in one year. Of course if you latter sell the watch you have a capital gain to report.
My wife's response to the whole concept of deducting your watch is to make hissing noises and mutter about mental problems of men with small sexual organs.
Edited to add: On reviewing the rules I find that you can depreciate captial expenses as employee business expenses for items that typically last over a year. In fact, the example given in the Ernst & Young guide is that of a goverment employee who was allow by tax court to depreciate part of his private aircraft which used for goverment travel and not fully reimbursed.
I can say with certainty that an employee claiming a 179 deduction as a schdule A expense is just begging for an audit.
(aside: I do think that a big round airline pliot wheel hat is deductable as an employee business expense. No one would wear one of those if they were not forced to.)
Reviewing the rules for employee business expenses the only fig leaf I can find for you is if you want to call your $4000 watch a "small tool". I don't think that is what the IRS had in mind though.
I see no way that you could defend putting an item that costs thousands, lasts for years and might even appreciate down as an employee business expense.
It is different for schdule 'C' filers. Many of them invest tens of thousands of dollars in tools, so a $4000 capital expense for an "aviation chronometer" on a schdule 'C' is much less likely to inflame the IRS.
The argument I made to the court of my spouse was that our expensive watch is capital, a tool that last for years and therefore can and should be depreciated by self-employed pilots. Under the current seciton 179 rules you could then depreicate the watch in one year. Of course if you latter sell the watch you have a capital gain to report.
My wife's response to the whole concept of deducting your watch is to make hissing noises and mutter about mental problems of men with small sexual organs.
Edited to add: On reviewing the rules I find that you can depreciate captial expenses as employee business expenses for items that typically last over a year. In fact, the example given in the Ernst & Young guide is that of a goverment employee who was allow by tax court to depreciate part of his private aircraft which used for goverment travel and not fully reimbursed.
I can say with certainty that an employee claiming a 179 deduction as a schdule A expense is just begging for an audit.
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