NBAA Article Explains IRS Stance On Entertainment Disallowance For Sole Proprietors

The Internal Revenue Service (IRS) recently released Chief Counsel Advice (CCA) 2021-17-012 to explain that sole proprietor flights are generally not subject to the employer-provided aircraft rules in Internal Revenue Code Section 274. This CCA explains that the entertainment disallowance allocation rules applicable to flights on employer-provided aircraft do not apply to flights on aircraft operated by a sole proprietorship.

The National Business Aviation Association (NBAA) proactively sought clarification on this issue in a meeting with the IRS. Holland & Knight Partner and NBAA Tax Committee Chair John Hoover wrote an article for NBAA members to explain the impact of the CCA for sole proprietor structures.