Keith Swirsky Quoted in NBAA Article About Immediate Expensing

A bill recently introduced in the U.S. Senate could make an important tax depreciation rule that has stimulated the sale of new and used business aircraft a permanent part of the tax code.

Under the 2017 Tax Cuts and Jobs Act, eligible taxpayers can now deduct 100% of the cost for qualifying new or used aircraft or fractional shares in the first year of ownership. This provision – known as immediate expensing or bonus depreciation – however, is only available to taxpayers until the end of 2022 when the available immediate deduction begins to phase-down.

That could change, though, with the introduction of the Accelerated Long-Term Investment Growth Now Act by Sen. Pat Toomey (R-PA), which would make full expensing permanent.

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The ability to fully expense an aircraft purchase has been positive for the business aviation community, said Keith Swirsky, president of GKG Law and chairman of the firm’s Business Aviation Group and Tax Group. “The benefits of immediate or full expensing are compelling, and this tax provision certainly has incentivized people to purchase an aircraft who otherwise would not have made that purchase or might have stayed with fractional ownership,” he said.

Read the article in its entirety here

Structuring Use of Corporate Aircraft Within the Framework of FAA Rules and Regulations

On February 18, 2020, GKG Law’s Troy Rolf led a detailed webinar on the topic “Structuring Use of Corporate Aircraft Within the Framework of FAA Rules and Regulations.” This webinar provided an overview of common structures for aircraft ownership and operation and associated pitfalls, including the so-called “Flight Department Company Trap”; negative consequences associated with impermissible operating structures; and proper structuring of personal use of corporate aircraft to comply with FAA rules and regulations.

A full audio recording of the webinar can be accessed here and the presentation slides are below.

PDF FileStructuring Use of Corporate Aircraft Within the Framework of FAA Rules and Regulations

Establishing an Association Group Purchasing Organization

As trade associations and professional societies continue to lose members because of increased economic concentration, they search for effective means for supporting smaller members who compete in local markets. Often the Mom and Pop retail store or the independent professional is facing stiff competition from national retail operations or professional chains that have acquired numerous local operations and formed national competitors. These national competitors use their expanded purchasing power to obtain volume discounts when purchasing goods and services which they then resell in direct competition with the Mom and Pop retail stores or independent professionals.

Associations and professional societies recognize that small businesses promote the entire industry and/or profession by providing necessary governmental grass root support on both the state and national level and by giving consumers, especially in rural or semi-rural areas, access to products and services. In order to keep their small members competitive, some associations and professional societies have established Group Purchasing Organizations (GPO). A GPO is a separate corporation that combines the purchasing power of its members to obtain volume discounts for products and services which, when applicable, they resell to consumers. No association member is required to join the GPO. Those who are interested voluntarily agree to purchase a specific amount of goods and or services from the GPO. The GPO then shops competing sellers and negotiates volume discounts for its members. The sellers ship directly to each buyer and the GPO gets a small commission.

There are antitrust issues involved with establishing and operating a GPO. If not structured properly, the GPO and its members may engage in practices that could be construed as price fixing, concerted refusals to deal, or attempts to control markets in violation of the antitrust laws. However, the good news is that the FTC and the Antitrust Division of the Department of Justice (DOJ) have established guidelines and issued a series of Advisory Opinions and Business Review Letters that set out clear directions of how to operate a GPO and minimize antitrust risks. 

The recent Business Review Letter that the Antitrust Division sent to the American Optometric Society is a good tutorial. See January 15, 2020 Business Review letter from Makan Delrahim, Assistant Attorney General, Antitrust Division, Department of Justice to Victoria L. Smith, Stinson Leonard Street, LLP, Counsel for the American Optometric Association attached below. This Business Review Letter describes the structure of the industry, the proposed structure of the GPO, the competitive benefits of the GPO, the potential antitrust risks, how the association’s proposal meets established DOJ criteria, and concludes that, based on the facts presented, the DOJ does not intend to challenge the proposed action.

GKG Law has assisted its clients with establishing their GPOs and will be glad to discuss establishing a GPO with your association.

If you need assistance, please contact Steve Fellman at sfellman@gkglaw.com or David Monroe at dmonroe@gkglaw.com. 

PDF FileJanuary 15, 2020 Business Review letter

FMC Approves New Final Rules

New regulations that the FMC voted to approve January 15, 2020.  The new rules pertain to the actions of agents of NVOs and ocean forwarders.  If the requirements are not met, there is a possibility that both the agent and the licensed OTI may have liability for having violated the Shipping Act.  

On January 15, 2020, the Federal Maritime Commission (“Commission”) held its first meeting of the year. At that time, the Commission voted to issue and publish two final rules, one of which is particularly relevant to NVOCCs and forwarders that use agents and implemented provisions of the recent Frank LoBiondo Coast Guard Authorization Act of 2018.

The final rule is intended to:

  • Clarify that persons that advertise or hold themselves out as OTIs must be licensed as OTIs and meet associated financial responsibility requirements.
  • Make clear that OTI licensing and financial responsibility requirements do not apply to a person performing OTI services on behalf of an OTI for which it is a disclosed agent.
  • Expand the prohibition on common carriers knowingly and willfully accepting or transporting cargo for OTIs that do not have a tariff or do not meet financial responsibility requirements.

While these changes may seem somewhat innocuous, it is likely that many agency arrangements between OTIs and their agents are somewhat informal or are even not in writing.  It is similarly likely many agents may not be making it clear that they are acting as the agent of the licensed OTI when they book cargo, enter into service contracts, cut HBLs or otherwise make logistical arrangements for the movement of ocean cargo.  In those instances, the new final rule could lead to significantly liability on the part of both the agent and the OTI if the transportation documentation and booking process does not clearly spell out the relationships of the parties.

Although these final rules still need to be reviewed by the Office of Information and Regulatory Affairs (since they amount to additional regulation), it is likely that all will be approved because they are required by the LoBiondo legislation.  We accordingly expect that the final rules will be published shortly in the Federal Register and become effective 30 days following publication.  We suggest that consider reviewing your agency relationships to ensure that the agents are always making it clear that they are acting as your agent, not as a principal in their own right, for traffic moving under your HBLs.

If you have any questions, let us know. 

 

Options for Allowing Third Parties to Use Your Aircraft: Income Tax, Excise Tax and Sales Tax Considerations

On Tuesday, January 14, 2020 at 1:00pm ET, GKG Law's Keith Swirsky led a webinar on the topic "Options for Allowing Third Parties to Use Your Aircraft – Income Tax, Excise Tax and Sales Tax Considerations." This webinar provided an overview of (i) options available in connection with allowing affiliated  persons and unaffiliated third parties to utilize a business aircraft including Part 135 aircraft charter, aircraft time sharing and interchange arrangements under Part 91.501, and aircraft dry leases under FAR Part 91, with a discussion of specific income tax, excise tax and state sales tax considerations of such arrangements and (ii) liability and risk management issues relating to such arrangements.

A full audio recording of the webinar can be accessed HERE!

PDF FileView as PDF

History of Trucking Regulation: 1935 to 1980

Ed Greenberg Co-Authors article entitled History of Trucking Regulation that was published by the Transportation Lawyers Association.

PDF FileView as PDF

GKG Law’s Keith Swirsky Participates in AIN Webinar "Necessary Steps to a Successful Aircraft Transaction"

On December 10, 2019, GKG Law's Keith Swirsky participated as a panelist on the Aviation International News (AIN) webinar "Necessary Steps to a Successful Aircraft Transaction."  Throughout the aircraft buying and selling process, there are several steps where the deal could go sideways, including miscommunication, ethics issues, misunderstanding of regulations, and any number of traps for the unwary. During this webinar, Keith and his co-panelists discussed the planning and key actions that should be taken during an aircraft transaction in order to reduce the number of surprises, avoid costly mistakes, and in turn lead to a successful transaction experience.

Key lessons:

  • Identifying and assembling the right team (early in the process)
  • How to ensure a great client experience
  • Preparing a checklist of action items/steps
  • Timing considerations to complete the action items/steps
  • Conducting the closing and post-closing follow-up
  • Caveats for financial stages and regulation compliance

More information on "Necessary Steps to a Successful Aircraft Transaction" can be found here

GKG Law’s Oliver Krischik Leads Webinar on "Office of Foreign Assets Control Risk Assessment"

On December 5, 2019, GKG Law's Oliver Krischik led a Lorman CLE webinar on the topic "Office of Foreign Assets Control Risk Assessment."  The webinar addressed the May 2, 2019 release of new guidance by the Office of Foreign Assets Control (OFAC) stating that holistic sanctions “Risk Assessments” must be a part of a company’s Sanctions Compliance Program (SCP) for the SCP to qualify as a mitigating factor in enforcement decisions. These risk assessments require banks and businesses to understand (1) how individual departments and product lines might be exposed to sanctions risk, (2) how to identify high-risk transactions and parties, and (3) which of these risks can be addressed with appropriate controls. Yet, many banks and businesses continue to rely on processes that do not reflect the diverse range of sanctions programs and measures in place today.

For example, OFAC’s sanctions now country-based embargoes, lists of prohibited parties, sectoral sanctions with transaction-specific restrictions, as well as numerous general licenses that authorize certain activity with a sanctions nexus. This topic helps persons at the C-Suite, department management, and transaction review levels understand how to evaluate risks posed by parties, transactions, and entire lines of business. In addition, the material explains how companies can identify measures to mitigate sanctions risk at systemic and transaction-specific levels. Moreover, this topic covers specific issues concerning financial transactions with a historically high-risk of sanctions exposure. As OFAC continues to raise its standards for compliance practices, this information is critical for businesses to ensure that their SCP meets the new requirements and mitigates unnecessary risks across their organizations.

This webinar was hosted by Lorman Education Services.  

Federal Income Tax Treatment of Personal Use of Aircraft

On Tuesday, November 19, 2019 at 1:00 pm ET, GKG Law's Keith Swirsky and Ryan Swirsky led a detailed webinar on the "Federal Income Tax Treatment of Personal Use of Aircraft."  This webinar provided an overview of federal tax issues that arise due to personal use of business aircraft including income inclusion rules, excise tax implications of cost reimbursements, effect of personal use on operating expense and depreciation deductions and common strategies to minimize negative tax consequences to an aircraft owner or passenger arising from personal use of a business aircraft.

A full audio recording of the webinar can be accessed here

PDF FileFederal Income Tax Treatment of Personal Use of Aircraft (PDF)

GKG Law’s Steve Fellman Leads Association TRENDS Webinar on "Association Structure and Legal Compliance in the World of Facebook, Twitter and #METOO"

In the world of Facebook, Twitter and #METOO, inappropriate behavior can instantly land your association in the unforgiving spotlight of social media—and the even harsher legal spotlight.

It’s critical to be proactive. You need strong, specific policies that minimize the likelihood of issues. If situations do arise, you need ready-to-implement procedures that empower your staff to limit potential financial and public relations damage.

Here’s how to change your association’s structure and compliance strategies to put these protections in place.

In this 90-minute webinar hosted by Association TRENDS, association legal expert and GKG Law counsel Steven John Fellman explains how organizations must adapt corporate structure, internal operations and compliance policies to address the new legal challenges sparked by technological innovations, social media and #METOO.

Real-world case studies.  Learn how to keep outdated structure and policies from exposing you to employment and harassment issues and the pitfalls of promoting an industry or profession to the public. You’ll also have the chance to ask your own questions during the Q&A portion of the webinar.

Find more information and registration details for "Association Structure and Legal Compliance in the World of Facebook, Twitter and #METOO" here.

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