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Come Fly with Me—But It’ll Be Taxable

May 07, 2024 (3 min read)

It’s not unusual for large employers to own or lease private jets to transport their top executives to business locations. All business travel is a tax-deductible business expense (and generally the costs related to the jet), but what if there’s a personal element to the travel? Maybe the individual or individuals travel private for security reasons? Or maybe they bring their spouses? Maybe the travel purpose is part-business, part-personal, or even wholly personal? Treasury Regulations address the special valuation rules for aircraft travel of these sorts. But note that the IRS has a special interest in auditing this kind of travel.

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Related Content

  • Tax Key Legal Developments Tracker (Federal)
    Using Inflation Reduction Act funding, and as part of ongoing efforts to improve tax compliance in high-income categories, the IRS announced in late February 2024 plans to begin dozens of audits on business aircraft involving personal use. The IRS also announced the Standard Industry Fare Level and terminal charges that apply when using the special valuation rule for non-business travel on employer-provided aircraft set forth in Treasury Regulations.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.   

  •  Tax Key Legal Developments Tracker (Federal)—keep up to date with key legal developments!
    • Business Entities. IRS and Treasury propose regulations providing guidance on reporting and paying the new excise tax on repurchases of corporate stock made after December 31, 2022, that would impact certain publicly traded corporations that repurchase their shares or whose shares are acquired by specified affiliates. 89 Fed. Reg. 25829 (Apr. 12, 2024).
    • Business Entities. IRS provides a limited waiver of the addition to tax under I.R.C. § 6655for underpaying estimated corporate income tax to the extent any underpayment is attributable to a portion of a corporation's corporate alternative minimum tax (CAMT) liability. I.R.S. Notice 2024-33.
    • Individual Income Tax. IRS addresses the federal income tax treatment of amounts paid toward the purchase of energy efficient property and improvements under Department of Energy Home Energy Rebate Programs pursuant to Sections 50121 and 50122 of the Inflation Reduction Act of 2022. Announcement 2024-19.
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