NAFA member Nel Stubbs, Principal at Stubbs Aviation Advisors, shares her article on time sharing agreements and applicable federal excise taxes.
Current tax laws affecting aircraft leasing are very involved, and they don't become any easier when aircraft operators attempt to maximize their aircraft's usage through a time-sharing agreement.
FAR Part 91.501(c)(1) defines a time-sharing agreement as follows: An arrangement whereby a person leases his airplane with flight crew to another person, and no charge is made for the flights conducted under that arrangement other than those specified in paragraph (d) of section 91.501.
91.501(d) The following may be charged, as expenses of a specific flight, for transportation as authorized by paragraphs (b) (3) and (7) and (c)(1) of this section:
(1) Fuel, oil, lubricants, and other additives,
(2) Travel expenses of the crew, including food, lodging, and ground transportation.
(3) Hangar and tie-down costs away from the aircraft's base of operation.
(4) Insurance obtained for the specific flight.
(5) Landing fees, airport taxes, and similar assessments.
(6) Customs, foreign permit, and similar fees directly related to the flight.
(7) In flight food and beverages.
(8) Passenger ground transportation.
(9) Flight planning and weather contract services.
(10) An additional charge equal to 100 percent of the expenses listed in paragraph (d)(1) of this section.
As in a number of other situations, the FAA and the IRS are not necessarily in agreement with each other in their opinions on whether a time-sharing agreement is noncommercial or commercial transportation. The FAA allows a time sharing agreement to be conducted under Part 91. Therefore, for FAA purposes, as long as the truth-in-leasing requirements of FAR 91.23 are met and the charges for transportation do not exceed the per flight amount specified in paragraph (d) of 91.501, a time-sharing agreement is considered noncommercial transportation.
This article was originally published by Stubbs Aviation Advisors on August 14, 2026.