In an extensive interview with Haute Lawyer magazine, Mike Kosnitzky, the co-leader of Pillsbury’s Private Wealth practice, discussed the ins and outs of private aircraft ownership and how it affects the finances of the ultra-wealthy.

Noting that while private jets are an essential asset of the business of many family offices, he said that “private aircraft owners are often unaware of the highly complex and nuanced federal income tax and state sales and use tax rules involved in aircraft acquisitions and operations.”

He added that “the rules as to how to obtain, maximize and utilize deprecation in the year an aircraft is first placed in service, and avoiding or minimizing sales and use taxes in the year of the purchase and thereafter, are hugely misunderstood, even by tax professionals who do not practice in this specific area.”

Another thing that many owners fail to understand is how to “properly document and plan business flights to maximize deductions that may offset ongoing operating costs are also lost because of a failure to understand the travel expense rules.”

Kosnitzky warned that “IRS audits have become routine in this space, and my firm is handling several at this time, so planning and documentation formalities are a necessity.”

See here to read more about the tax implications of private jet ownership.