Since Florida-based Aviation CPAs focuses entirely on services involving aircraft usage, general manager Shayne Gutierrez said they run into little competition. In fact, the group offers its expertise in the aviation aspects of tax returns to other CPA firms and helps individual clients understand the specific rules and regulations surrounding aircraft use. For example, individuals using a company aircraft for personal reasons are exposed to a specific tax, because doing so is considered a fringe benefit, and both the company and the pilot need to follow strict reporting requirements.
Reporting agencies such as the Federal Aviation Administration and the Internal Revenue Service have their own rules regarding aircraft, and the firm helps clients navigate those nuances and ensure compliance. When it comes to tax deductions, Aviation CPAs also developed software called Flight Tax System to assist companies with calculating fringe benefits for their employees, as well as disallowances and standard industry fare levels.
"Overtime rates options skyrocketed when the pandemic hit and, as a relief method, regulating agencies came up with two additional ways to calculate them," explained Gutierrez. "As a result, what used to be one standard turned into three different rate options, and it was all very confusing for taxpayers who didn't know which rate to use."
Aviation CPAs must also navigate differences between the size of aircraft models that people are traveling on. For example, a smaller lightweight jet isn't going to have as high of a multiplier in calculating fringe benefit rates, and bigger models will result in higher taxes. The firm also assists companies in figuring out how to make sure a flight qualifies for business purposes.
Legislative changes are numerous in the aviation industry, notably regarding bonus depreciation. Until 2023, companies could deduct 100% of the cost of eligible assets, such as aircraft, but the passage of the Tax Cuts and Jobs Act reduced this deduction to 80%. But rules are not always negative. For example, if more than 50% of an aircraft's seats are used for business purposes, certain circumstances allow executives' family members to travel for personal reasons without a civil charge. Children under the age of two are also never taxed for personal use of an aircraft, which clients often don't know.
"The fact that this is a niche market says it all," said Gutierrez. "There's so much complexity in the rules and so much to be considered that there's just never a dull moment. This is an incredible field to come into, and there are many organizations to be part of if you have an interest in the industry."
The firm is regularly in contact with the
As each client is unique, so are the concerns that come with them. For example, commercial airlines were dramatically impacted by COVID-19, and people have forever changed the way they travel. As a result, Gutierrez said it prompted more creativity within the private transportation sector, and the firm has seen a great increase in charter and fractional aircraft activity, which designates co-ownership of an airplane. But after more than three decades of activity, she said the firm was not intimidated by the pandemic's impact on air travel, nor would it back down from future changes.
This is the latest installment in our "Riches in Niches" series on accounting firms that are finding success in specific verticals. You can see other installments here:
