Fact Checking tax myths

I’m not sure what is meant by the statement: “business executives may deduct the full cost of a private jet.” This is ambiguous at best. First, if an asset (even a jet) is used in business to earn income, the cost (even for a jet) is deducible to the business. Company jets are used all the time to ferry exe’s to and fro for business purposes. In that case, business exe’s don’t get the deduction. The company gets the deduction. Second, to the extent that a company jet is used by exe’s for personal purposes (the family goes on vacation), the cost of the trip is treated as income to the exe. He must pay taxes on the value as if the company wrote a payroll check. Third, if the company does not include the value of the private use in the income of the exe, the company is precluded from taking any deduction for the expenses of the trip. Finally, if an individual owns an airplane that is used partially for business and partially for personal purposes, only the expenses directly related to the business use of the asset are deductible. This is no different than the auto expenses for any self-employed person. You must keep a mileage log to prove the business use of your car. If you don’t keep a log to show the percentage of business use, you don’t get a deduction. An airplane is no different. As to the $250 for teachers’ expenses, that is actually a better deal than employees in any other field are allowed. Such expenses are considered unreimbursed employee expenses. For workers other fields, such expenses must exceed 2% of adjusted gross income to be deductible. Then, the cost has only a marginal effect on one’s tax liability. But teachers get to claim their expense as an “above the line” adjustment to income. This equates to a dollar-for-dollar reduction in tax, not just a marginal reduction. The $250 deduction was political payback by the Clinton Administration to the nation’s teachers unions in the 1990s in exchange for their support of his re-election bid.