SIFL Fringe Benefit Income
Corporate flight departments must impute income to the executives that have access to personal use of the aircraft. SIFL income will be added to their W-2 or 1099 for their flights and the flights of their family and guests.
Disallowed and Non-Deductible Aviation Expenses
The IRS requires each flight department to self-report the portion of its aviation-related costs which are disallowed (non-deductible). The disallowance is tied to non-business and personal use of the corporate aircraft. Generally speaking, the percentage of the flight department’s expenses which become nondeductible is the same as the percentage of each aircraft’s personal passenger load for the tax year. For example, if 25% of the occupied seat hours were for personal and entertainment use of the executives, directors or owners, 25% of the company’s overall aviation costs become non-deductible (including fuel, salaries, depreciation).