Michael Goldfarb, of Worldwide Standard, and Bill Sweetman, of Ares, report on the new Boeing Business Jet (BBJ) for Congress.

The interior of the BBJ was completed by Greenpoint Technologies, the sponsor of this blog:

“The C-40C, jam-packed with 40 seats by luxury-jet specialists at Greenpoint Technologies, is the third and last of a batch ordered in 2005. They will be operated by the USAF reserve to carry Congressional delegations around the world.”

The blog Boeing from Seattle has details on an announcement from Boeing Business Jets (BBJ) and Rockwell Collins that a new Enhanced Vision System (EVS) for the BBJ will be ready by early 2008. The new system is expected to enhance “situational awareness at night or in poor weather conditions.”

The site notes:

“BBJ operators that upgrade to the new EVS system will require an upgrade to their HGS 4000, as well as the infrared camera.”

Legal eagle Carol A Laham was written an informative article featured the December 2007 issue of Airworthy: Insights into Current Aviation Legal Issues regarding the use of private corporate aircraft by elected officials. There are new laws in place that make it much harder for members of the Senate or Congress to hitch a ride on your plane.

Gary I. Horowitz of Wiley Rein has authored an article in their Dec 2007 newsletter covering the new rules surrounding personal use of business aircraft. Horowitz also provides a nice overview of the IRS’ general position regarding what they view as deductible and what’s an “entertainment” use.

If a company allows its officers, directors and more-than-10% owners (a group defined by the IRS as “specified individuals”) to use the company’s aircraft for entertainment purposes, the company could lose a substantial amount of tax deductions relating to the aircraft and greatly increase the net cost of owning and operating the aircraft.

The IRS considers “entertainment” use of business aircraft to be any activity that is generally and objectively treated as entertainment, amusement or recreation. “Entertainment” does not include travel for the company’s business purposes and for reasons such as medical purposes, attending funerals, participating in charitable activities and attending to other business activity. The IRS would probably consider any other personal use of a business aircraft to be “entertainment” and the related aircraft expenses subject to disallowance (except to the extent included as compensation by a specified individual).

The new rules in a nutshell:

• Regulations now permit a taxpayer to depreciate an aircraft on a straight-line basis (instead of MACRS) over an aircraft’s class life when calculating disallowed entertainment-related deductions.
• Investment/basis in its aircraft is not reduced for tax purposes by any depreciation disallowed due to entertainment use by specified individuals.
• Expenses allocable to an aircraft’s charter or lease to an unrelated third party in a bona-fide business transaction for adequate and full consideration are not subject to disallowance.
• Deadheading is now treated as having the same number and character of passengers as the leg of the trip on which passengers are aboard for purposes of determining deduction disallowances.
• The fringe benefit “consistency rule” is relaxed and now allow a company to allocate more compensation to specified individuals on entertainment flights, thereby further reducing any deduction disallowances to the company.
• You are now allowed to choose one of three different methods to determine the amount of disallowed deductions. This gives you the opportunity to apply the method that gives you the best tax result.

The entire article is here.

According to Russ Niles of AVWeb, Art Nalls, a civilian, took what is “likely the first civilian Harrier jump jet…in private hands” on its inaugural flight in Maryland.

The jet was purchased from the British Royal Navy. Nalls, a former Marine test pilot, has spent most of his career in the American version.

Nalls’ biography offers details of a fascinating life, including this bit about his experience as a flight test pilot in the engine airstart program:

“Art accumulated over 6 hours of flight time in single-engine jet aircraft WITHOUT THE ENGINE RUNNING. Other than the space shuttle, that’s probably the fastest glider training available.”

The City of Santa Monica, CA, has voted to prohibit category C and D aircraft (approach speeds between 121 and 166 knots) from using the local airport, according to an article in the Santa Monica Mirror by Terence Lyons.

The FAA has come out against the ban:

“The unanimous vote came after the City received a letter from the FAA earlier that same day calling the then-proposed ordinance ‘flatly illegal’ and threatening ‘to expeditiously use its authority and all available means’ to prevent implementation of such a City law.”

A meeting between city officials, the FAA, and four U.S. Representatives has been scheduled for December 5, 2007, in Washington, D.C.

The ordinance would affect large business aircraft, and the National Business Aviation Association (NBAA)is against it. You can read the text of a letter sent to Santa Monica city officials here.

The December issue of a newsletter published by The Metropolitan Corporate Counsel (TMCC) features an article by Gary I. Horowitz regarding taxes and entertainment use of business aircraft.

A few choice quotes:

“Generally, a company can deduct all ordinary and necessary expenses paid or incurred during a tax year in carrying on any trade or business. However, no deduction is allowed for an activity generally considered to be entertainment. If a company allows its officers, directors and more-than-10% owners (a group defined by the IRS as “specified individuals”) to use the company’s aircraft for entertainment purposes, the company could lose a substantial amount of tax deductions relating to the aircraft and greatly increase the net cost of owning and operating the aircraft.”

“Generally, the cost of entertainment use of a business aircraft (in terms of disallowed tax deductions) can be much higher than an individual commercial flight’s cost. To determine aircraft entertainment use expenses, a company must take into account all of the operating costs of maintaining and operating the aircraft. According to the IRS, use of the term “operating costs” refers to all costs, fixed and variable, including fuel, crew salaries, take-off, landing and hangar fees, maintenance, management fees, insurance and depreciation claimed on the taxpayer’s tax return. Therefore, the IRS requires that all such variable and fixed costs be included when calculating aircraft entertainment use expenses.”

“In order to determine the amount of disallowed deductions caused by entertainment use of a business aircraft, the IRS Tax Regulations allow you to choose one of three different methods. Three different methods seems unduly complicated, but it gives you the opportunity to apply the method that gives you the best tax result because you can choose the preferred method after the tax year’s end.

In general, it appears that the “flight-by-flight” method will give the most accurate results. Under the “flight-by-flight” method, a company will first add up its total aircraft expenses for the year and divide that amount by the total number of flight hours or miles for the year to determine the “cost per hour” or “cost per mile.”

AVWeb is reporting on an unusual theft - and attempted theft - involving a corporate jet.

According to the article:

“An individual has been charged after $5,000 worth of headsets were stolen from an aircraft that he allegedly drove off a taxiway and into a soybean field at La Porte City (Indiana) Airport. The arrest is likely among the preferred results after the aircraft’s operator (presumably the alleged thief) failed to negotiate a turn from taxiway to runway and got stuck in the field.”

Apparently, once the jet became stuck in the field, the alleged thief took off with 5 of the headsets, worth $5,000 total.