Navigating Tax Deductions and Private Air Travel

Edgar Alacan is a well established New York entrepreneur who cofounded Jets.com and leads a respected charter jet travel service. Overseeing international and domestic itineraries for discerning clients, Edgar Alacan takes pride in exceeding expectations in all aspects of private jet travel.

One important aspect of private jet travel among business passengers involves tax deductions. The tax reform enacted in early 2018 did not alter the computing method or amount allowable for “employee’s income for personal use of an employer-provided aircraft.” The tax code is still one in which the amount allowable within the individual’s income for personal flights is based on either Standard Industry Fare Level rate, or fair market value of transportation provided.

One aspect that has changed with the new tax code is that the section 274 “directly related” or “associated with” test no longer applies when it comes to travel to non-vacation and vacation locations where business entertainment is involved. In the past, these entertainment expenses were 50 percent deductible. With the new law in place, all such expenses have become non-deductible. In addition, employers can no longer deduct costs attributable to “personal non-entertainment flights” which they arrange for an employee.

This does not mean that there are not tax-advantageous ways of arranging private jet travel, which can be designed with the help of an experienced tax consultant. One longstanding strategy focuses on the ability of private jets to reach airports that commercial jets cannot, with the deducted expenses shown to be “ordinary and necessary.”