First of all we need to determine if the use of the aircraft is a deductible business expense.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business.
Based on the type of you business - you need to determine if the use of the aircraft would be ordinary and necessary - if yes - that would be a deductible business expense.
For travel expenses deduction - please see for reference IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf
You can deduct all of your travel expenses if your trip was entirely business related. If your trip was primarily for business and, while at your business destination, you extended your stay for a vacation, made a personal side trip, or had other personal activities, you can deduct your business-related travel expenses.
Travel from home to your work place is always considered a commuting travel and not deductible. Please see IRS explanation here
If you are using part of your home for business purposes and claim such deduction - you may consider travel from home to work as business expenses - otherwise - that is considered a commuting and may not be deducted.
Another issue - if you travel to a permanent or to a temporary place.
Temporary job assignment would be if it is expected to last and actually lasted less than a year.
In this case - you may deduct additional meal and lodging expenses.
I would also suggest to look at the schedule C - http://www.irs.gov/pub/irs-pdf/f1040sc.pdf - part II lines 8-28 - see the list of most common deductible business expenses.
If you are an employee - you would deduct travel expenses on the schedule A - http://www.irs.gov/pub/irs-pdf/f1040sab.pdf - and such deduction would be a subject of 2% floor limitation.
Please let me know if any clarification is needed.
Yes - it does
- if you are self-employed and your income is reported on the form 1099-misc - http://www.irs.gov/pub/irs-pdf/f1099msc.pdf - you will report all your business income and deduction on the schedule C - and only your net business income will be added to your taxable income.
In additional - your net business income will be subject of self-employment tax 15.3% - for net business income up to $106,800; and 2,9% for net business income above $106,800.
If you are an employee - your employer has already withheld FICA taxes - and you will have to add to your income taxable wages.
In this case your wages are not reduced by your business expenses - as in case for self-employed - but you would claim them separately on the schedule A. And in this case your employee business expenses are not fully deductible - but only whatever is above 2% of your adjusted gross income.
If for instance your adjusted gross income is $150,000 - and your employee business expenses are $10,000 - your will deduct
$10,000 - $150,000*2% = $7000
That is the difference in deduction for a self-employed and for an employee.
As you are a physicians - it doesn't sound that using aircraft is ordinary and necessary
for your occupation - and that would be the question you might need to address in case of audit.
If you will claim the use of the aircraft for travel - you should consider that in case of the audit the IRS agent might find such expenses to be lavish or extravagant under the circumstances. If so - your deduction might be disallowed.
Thus - you would need to provide a proof that the use of the aircraft for travel - is a necessarity and not extravagant expenses.
I suggest to have a local tax preparer in your state and provide all information above for considerations.
Just answer rules do not allow to have a contacts with clients outside this website and do not allow to establish a professional-client relationship.
Let me know if you need any help or clarification.
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