Since not many of us live in the private aircraft world we will keep this blog mercifully short. The Wall Street Journal on Friday April 12 reported on an audit of Boeing’s deployment of their fleet of executive aircraft. This seems to be related to CEO David Calhoun’s announced departure from the company as it arises from an internal audit.
The key sentence in the article that resounded with us was a reminder that: “When executives use a company [aircraft] for personal travel, it typically counts as taxable income.” It has been a while since we got into the weeds on this topic but back then, the FAA required all aircraft to maintain manifests related to where they fly and who is on the inside when they do. This is a valuable document for a divorce lawyer to have a look at when involved in cases with highly compensated executives.
Ask anyone who has done it and they will tell you that there are addictive qualities to flying with fewer than 100-500 fellow travelers. And once you fly in that world, cramping yourself into an 18 inches of seat seems like a prison sentence even if the beach is your destination. What we learn from the Journal is that a lot of executives are wanting to go in style. The problem is that the fair rental value of a Learjet ranges from $3,000 to $4,500 an hour, which makes even a quick sprint to Florida $9-14,000. That really can add to your salary if you are being charged for it by your employer.
The pandemic has changed a lot including where executives work and where they sleep. And Boeing is itself a cumbersome example. It was a Washington based company from 1916 to 2001 when it moved to Chicago. Then in 2022 it announced it was moving to Virginia. So, chances are there is lots of private aircraft travel to manage 170,000 workers, most of whom are still in and around Seattle.
You can bet that much as senior executives like to travel in the company plane they are not high on paying real costs for these rides either as additional taxable compensation or, worse yet, deductions from the compensation they are paid. So, if you happen upon one of these cases and the spouse you represent starts telling you how she will miss going to the Hamptons or Aruba “on the house” you may want to ask the business which owns the plane just how many rides the “house” provided that were to destinations unrelated to company business. It will certainly add spice to your support proceedings. Rest assured the judge who just laid out $4,000 for his family of 4 to sit in coach for 7 hours making the same trip will want to know all the details.
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