LLC (Limited Liability Company)

[Cooper]

I have heard that some aircraft owners put their airplane in an LLC. Others, like me, have it simply in my name. I own a 1953 Cessna 170B and it is titled in my name. My wife and I were setting up a revocable trust the other day and the lawyer suggested that I put my air plane in an LLC. He simply said that it would be better there as it would reduce my liability.

Have any of you out there had any experience with your airplane in an LLC. I would like to really know the advantages and disadvantages with an LLC or an owner title.

I suppose this might not be the right kind of question for the Forum; but, maybe it will be OK to post. I have gotten a lot of good feedback over the years with questions that I have had and I really appreciate the help I have received.

Thanking all of you who respond in advance.

[djbaker]

"reduce" is the operative word here. An airplane in an LLC, as the only asset, would limit the liability to that asset only. BUT, if you were flying the plane and had an accident, You and the airplane could be liable. Remember there are no accidents today, someone is always at fault.

[GAHorn]

Right. You'd have to operate the airplane as a paid employee of the LLC, and even then you'd probably still have individual exposure for "negligence".

(In a somewhat related manner, isn't it interesting how we sometimes seek to avoid exposure to responsibility for our liabilities by incorporating, ... and then many corporations will support political agendas which admonish others to "be accountable" for their plights, or to "take responsibility" for their actions.) Hmmmn.

[flat country pilot]

Having no experience with this, my opinion is just an opinion.

I don't think you want to establish an LLC to own an airplane. If you already have an LLC set up for another reason and the LLC has the need for an airplane, it could be a way to reduce your ownership and operating costs. In other words, the LLC might be able to use some of the expenses as a tax deduction.

Consult a lawyer and/or accountant.

[jrenwick]

I once bought an airplane from a guy who had it registered to an LLC in Las Vegas. I assume that was a way of avoiding sales tax on it, because the plane was based in a state that has sales tax on aircraft. If he had been caught with it based there, he would have been forced to pay the sales tax and probably a penalty as well. He wasn't avoiding the tax liablility; he was just avoiding being billed for it. Not worth it, IMHO!

[Cooper]

Thanks for your insight and information concerning an LLC for an airplane. It has helped me a lot. I believe I will just continue to keep my airplane in my name and not even bother with an LLC.

Thanks again.

[voorheesh]

Another minor problem with LLCs and airplanes happens when members or their family/associates/business reimburses the LLC for any reason that can be construed as "transportation". If the IRS finds out, they can bill excise tax. Even if you do not hold an air carrier certificate, the IRS could consider it air transportation. Excise tax liability does not go away even in bankruptcy and you can go to jail for not paying it. And you thought the FAA was bad.