Deducting cost of flight simulation...

[1290SASRider 26]

Hello all.  As the dreaded day approaches when we must "give unto Caesar," I'm curious to know if anyone has a perspective on this issue...is there a precedent for professional pilots to deduct the costs associated with flight simulation?  Can't seem to find anything expressly addressing this either through a web search, looking through the IRS's publications or searching for "tax deduction" on AvSim.  Any thoughts anyone?  And thanks in advance for weighing in!

Edited April 12, 2018 by FLHXRider

[188AHC 2,138]

In my opinion I think it would raise a bunch of red flags with the IRS.  However, if it would be required by your employer or if the sim was FAA approved, there might not be as much questioning by Uncle.  Interesting question. If I were you, I would pose the question to a local CPA that is heavily involved in taxes.

 

[Matthew Kane 1,343]

The only way I was able to do it was years ago I was the owner of a computer school that ran classes for kids from 5 to 15 years old. For a few years we did offer a course in Flight Simulation that was 1 hour a week for 10 weeks with the last class being a visit to the local airport and a tour of the flight school. With this I was able to write-off all of the equipment and software for Flight Sim used in the school that I could also use for my own personal use. The revenue from the school was also a good way to pay for new software or hardware.

Besides that I think you would have a pretty hard time justifying the expense for tax deductions. Also this was not an easy way to write things off as running a small business is tough, but this was a fun way of doing something a bit different for the kids, and they really loved it as well. 

Edited April 13, 2018 by Matthew Kane

[n4gix 4,947]

As I am a full time developer, I've been claiming the depreciation on all of my computers and associated equipment for years now as well as the percentage of my home that is dedicated to my business office.

[BillW 210]

18 hours ago, FLHXRider said:

Hello all.  As the dreaded day approaches when we must "give unto Caesar," I'm curious to know if anyone has a perspective on this issue...is there a precedent for professional pilots to deduct the costs associated with flight simulation?  Can't seem to find anything expressly addressing this either through a web search, looking through the IRS's publications or searching for "tax deduction" on AvSim.  Any thoughts anyone?  And thanks in advance for weighing in!

David, keep in mind that tax reform has done away with many deductions. Also, if your employer provides simulation training, I don't see this one flying.

Bill W

[1290SASRider 26]

7 minutes ago, BillW said:

David, keep in mind that tax reform has done away with many deductions. Also, if your employer provides simulation training, I don't see this one flying.

Bill W

Good points, Bill.  Though I think the tax reform you allude to doesn't actually take effect until the next tax year when so many things we were traditionally able to deduct apparently are going away.  And, yes, while my employer does provide simulation training, my rationale is that as my opportunities to fly are at best sporadic and subject to scheduling, using flight simulation to maintain proficiency represents a legitimate business use.  It only remains to see whether the IRS agrees.  The suggestion made to reach out to a tax professional seems like good advice.

[birdguy 3,943]

Centuries ago when I was going for my commercial rating the GI Bill was paying a percentage (I forgot how much, 50% - 75%) for my flight training and my portion was tax deductible as an educational and training expense.  If computers and flight simulators had been around then I would imagine at least a part of that cost would be deductible too.

If you are using your simulator as part of your training to become a professional pilot it might be allowable, but a tax professional could give you a better answer than we can.  

If it is for hobby and recreational use, no way.

Noel 

[scott967 62]

If it's an employee business expense better grab it in 2017 as it goes away for 2018.  Note that you only can deduct expenses that exceed 2% of your AGI.  If you are self-employed, independent contractor, single person LLC etc you have more latitude, but you have to show you have a profit motive and not a hobby.

 

scott s.

.

 

[Zatoichi 45]

If the FAA recognized sim time as seat time then sure, otherwise no.

[BillW 210]

On 4/14/2018 at 3:56 PM, scott967 said:

If it's an employee business expense better grab it in 2017 as it goes away for 2018.  Note that you only can deduct expenses that exceed 2% of your AGI.  If you are self-employed, independent contractor, single person LLC etc you have more latitude, but you have to show you have a profit motive and not a hobby.

 

scott s.

.

 

Spot on, Scott. I am a retired CPA and have read most of the act. This tax act is designed with the old "Trickle Down" theory in mind. It is specifically designed to aid the very wealthy and Corporate America. The hope is that spending for capital projects and corporate expansion will increase. I will not inject any politics to this discussion.

Bill W