The National Business Aviation Association (“NBAA”) held its annual Business Aviation Convention and Exhibition in Las Vegas, Nevada in October. The event was preceded by the 2024 Tax, Regulatory & Risk Management Conference, a two-day event, which had more than 300 attendees (a record).

Many attendees were eager to hear details on the status of audits of personal use of private aircraft use that the IRS announced in February 2024*. The consensus was that audits had increased substantially from years past – but not profoundly so. Rather, the concern appears to be over the tenor and focus of the audits having changed from years past. Speakers noted that IRS agents are looking for more detailed information and requesting receipts for hotels and cars for every mission. One speaker even suggested that agents are more aggressive and unforgiving in terms of documentation.

Their observations coincide with guidance provided in earlier articles about this topic. We maintain that taxpayers can ensure that they are prepared for audits by engaging with an experienced aviation tax attorney or accountant to review the rules, and reviewing their flight record-keeping to see whether there is room for improvement. Promptly after the end of each trip on a private aircraft, taxpayers should collect information on the identity of each passenger on board, their primary activities at each destination, and whether those activities were for personal, entertainment or business purposes. Adequate and contemporaneous documentation is a major requirement to avoid disallowance of deductions—and assessment of back taxes, interest and penalties—by the IRS.

The lesson for readers of this column, and particularly those in business aviation with deduction and depreciation concerns, is to build an experienced team of aviation legal and tax professionals to monitor aircraft use, flag potential issues and collect essential documents.

_{The information in this article is intended to highlight potential issues with aircraft ownership and operations and is therefore general in nature. Please feel free to contact one of our experienced aviation attorneys directly to discuss your specific business/personal needs.}

_{^{*Schilling, Erin, Corporate Jet Tax Breaks at Risk in IRS Probes of Personal Use, BLOOMBERG TAX, October 17, 2024, https://news.bloombergtax.com/daily-tax-report/corporate-jet-tax-breaks-at-risk-in-irs-probes-of-personal-use (access November 25, 2024).}}