Hadn’t thought about the IRS and 135 issues. Good feedback. I think with a little creativity that can be dealt with.


Assuming those issues are dealt with what concerns you? Would you do a pre buy/ risk assement? Write a clause where I have an out in exchange for what the hourly rent would have been had I continued to to lease?

Is ownership of the aircraft going to transfer to you?

You said you would put capex into it - P&I, etc. You going to put money into fixing up a plane he still owns?

If you exercise your out are you walking away from any capex or maintenance you put into the plane in excess of the hourly rent used? Let's say you had recently paid for a Doc10 inspection (whatever they call it on the 550).

You want to depreciate the capex or deduct it as a business expense? The IRS may see this deal when they look at your business, or you personally, or him.

We’re splitting hairs here and clogging up this awesome thread doing it. I think an aircraft maintained as required by part 91 has a perfectly acceptable level of safety. Obviously I must I put my family in such an aircraft. I believe the data bears me out (less than 10% of accidents have a mechanical origin).

That's the BT way.

Is ownership of the aircraft going to transfer to you?

You said you would put capex into it - P&I, etc. You going to put money into fixing up a plane he still owns?

If you exercise your out are you walking away from any capex or maintenance you put into the plane in excess of the hourly rent used? Let's say you had recently paid for a Doc10 inspection (whatever they call it on the 550).

You want to depreciate the capex or deduct it as a business expense? The IRS may see this deal when they look at your business, or you personally, or him.

Is it in a corporate entity? An advantage to that is a new shareholder may be admitted without reporting an ownership change at times. OTOH, there may be past obligations and liabilities one could step into. Single asset entity is easier to assess. Certainly would go to an attorney down the road.

Great point. In the quest to make it work from an FAA, IRS perspective AND keep it simple.. you could walk into a beehive. No good deed goes unpunished!

I asked earlier if the plane is in his name or in an LLC?

Three options here:

- He retains ownership and you dry lease aircraft usage from him. In exchange you pay maintenance, capex, insurance?, hangar?, data bases? as compensation for usage. At any point you can walk away if scheduling is not working or plane is getting to be a money pit.

- You get added to the title and you two are now partners. No dry lease needed. You pay expenses you want to. You need to talk to accountant but if you are going to deduct capex you need a capital cost for the asset now on your books. You need to work around gift tax of ownership share you now have and structure your upkeep payments as compensation for the ownership share. He may have tax impact if he does not keep it as gift to you that he takes as unified gift credit. You now share legal obligations and not as easy walking away from deal.

- Aircraft title gets transferred into your name. Have gift tax issues previously discussed to work around. You have full control. He has to trust you that you will live up to the deal. He dry leases plane from you. How do you explain to IRS his usage without any compensation? A gift? To walk away you sell the plane or transfer it back to him.

One wrinkle that needs to be considered since he is not young is what happens upon his death? You are then dealing with his Estate. Each one of the ownership options needs to consider how you deal with his Estate.

Because ultimately this deal is going to end when he is too infirmed to travel anymore or his death. Who owns the aircraft? Does it get transferred to your ownership?

Whatever ownership structure you work out you need to state the process if he wants out, if you want out, your death, or his death. What are each of you or your Estate left with?

I asked earlier if the plane is in his name or in an LLC?

Three options here:

- He retains ownership and you dry lease aircraft usage from him. In exchange you pay maintenance, capex, insurance?, hangar?, data bases? as compensation for usage. At any point you can walk away if scheduling is not working or plane is getting to be a money pit.

- You get added to the title and you two are now partners. No dry lease needed. You pay expenses you want to. You need to talk to accountant but if you are going to deduct capex you need a capital cost for the asset now on your books. You need to work around gift tax of ownership share you now have and structure your upkeep payments as compensation for the ownership share. He may have tax impact if he does not keep it as gift to you that he takes as unified gift credit. You now share legal obligations and not as easy walking away from deal.

- Aircraft title gets transferred into your name. Have gift tax issues previously discussed to work around. You have full control. He has to trust you that you will live up to the deal. He dry leases plane from you. How do you explain to IRS his usage without any compensation? A gift? To walk away you sell the plane or transfer it back to him.

One wrinkle that needs to be considered since he is not young is what happens upon his death? You are then dealing with his Estate. Each one of the ownership options needs to consider how you deal with his Estate.

Because ultimately this deal is going to end when he is too infirmed to travel anymore or his death. Who owns the aircraft? Does it get transferred to your ownership?

Whatever ownership structure you work out you need to state the process if he wants out, if you want out, your death, or his death. What are each of you or your Estate left with?

Do you have ownership rights or partnership rights?

Essentially he has put up 100% of the capital costs for the aircraft and you will be paying 100% of fixed costs including maintenance of the aircraft going forward. You two split the usage as you see fit.

That saves him the carrying costs of keeping the airplane and saves you the capital costs of a buy in.

Like I described in my prior post you need to work through how the deal terminates.

Will you accrue any equity in the aircraft over time? Maybe the partnership agreement says you accrue 1% equity per month up to 50%. So at the end of 4 years you have a true 50% ownership interest in the aircraft. By then you probably spent as much or more then what 50% of the aircraft is worth.

If you want to be partners with the guy on the plane then it may make sense. It will have all the issues that aircraft partnerships have.

We’re splitting hairs here and clogging up this awesome thread doing it. I think an aircraft maintained as required by part 91 has a perfectly acceptable level of safety. Obviously I must I put my family in such an aircraft. I believe the data bears me out (less than 10% of accidents have a mechanical origin).

Probably the biggest difference is that the "passenger" on an instruction flight is a pilot or wanna be pilot. That said, I suspect that at least some student pilots have no more insight into what's a safe flight or ability to determine the airworthiness of an airplane than a non-pilot passenger.

Do you have ownership rights or partnership rights?

Essentially he has put up 100% of the capital costs for the aircraft and you will be paying 100% of fixed costs including maintenance of the aircraft going forward. You two split the usage as you see fit.

That saves him the carrying costs of keeping the airplane and saves you the capital costs of a buy in.

Like I described in my prior post you need to work through how the deal terminates.

Will you accrue any equity in the aircraft over time? Maybe the partnership agreement says you accrue 1% equity per month up to 50%. So at the end of 4 years you have a true 50% ownership interest in the aircraft. By then you probably spent as much or more then what 50% of the aircraft is worth.

If you want to be partners with the guy on the plane then it may make sense. It will have all the issues that aircraft partnerships have.

Flew a trip to Cancun. Plan was SDL - KHRL - MMUN. Next day MMUN - KBRO (customs) - KSDL.

I have a retired 121 Captain that I am getting up to speed. I put him in the left seat in Cancun. We get fired up and call ground for taxi. "Sorry Senor, the radar is OTS and we are holding departures and arrivals." So we ended up with a one hour ground delay, but made it to KBRO (Brownsville, TX).

Customs went fine. The FBO quick-turned the fuel and again I put my copilot in the left seat. We attended Simcom together. He is a good pilot, just needs to get used to a complete lack of automation and safety nets in a little plane.

He fires up the right engine while I am securing the door. I am standing between the seats while he fires the left. Both he and I notice that the start light does not extinguish.

He says, "we have an abnormal, should I press the disengage?" "Yes, do it"

The starter light extinguishes as part of the final phase of the start. This is when the GCU (Generator control unit) tells the starter/generator to switch from a starter motor to a generator which provides the power for the plane. When the light stays on, this means the unit is still acting like a starter. The amp gauge was showing no current generated as confirmation.

Depressing the starter disengage button sends an electrical signal to tap the GCU on the shoulder and say - wake up, time to make the switch. If that does not work, you have a bigger problem and a rare failure.

Thankfully, Simcom did a good job of covering this scenario.

I reminded my copilot that we cannot cut fuel in this failure mode (which is the immediate reaction in all other start failures). Since the starter is still engaged, the assumption is that the start control or the start contact relay is stuck closed and will not open. If you cut fuel in this scenario, the battery will now be pumping out 800 amps into a starter that won't quit.

Eventually, the starter/generator will destroy itself while the wiring will heat up due to voltage drop and the battery may do something really ugly.

So - the proper procedure is to exit the airplane, pull the battery, then cut fuel.

Thankfully, I had ear plugs in my backpack. Since it was the left engine I got the full experience. I crawled under the motor, opened the "hell-hole" tail access panel, and contemplated my life choices.

I knew that fuel was running the motor and so there likely wasn't much current on those cables. Still, grabbing onto two giant cables that carry 800 amps and disconnecting them under a running jet engine is not what I wake up for in the morning.

It worked out.

After the shutdown, I tapped the cable to the battery and the contact was still closed - spark spark.

I then pulled the J-box cover and tapped on the two relays with my flashlight hoping it would open.

No joy.

Plane will be fixed today. We found a serviceable unit nearby. The mechanics were able to troubleshoot quickly since we knew what was wrong when they arrived.

I have now been stranded twice. Piston 1 - Jet 1. I have 15X the hours in pistons. Hmmmm.

I 'member that from initial training, but great that you did and disconnected that-a-way. No small task as you said. Great job! There are a lot of special circumstances to recall in that bird.