Corporate Transparency Act- Don’t Forget the Aircraft LLC
Complying with the Corporate Transparency Act in 2024 will be a major focus for businesses. Those tasked with complying with the new rules are likely to hear about the requirements from multiple sources and may already have a plan in place to achieve compliance for entities created prior to 2024. However, if your business owns an aircraft, or a fractional interest in an aircraft, you should double check that the entity in which the aircraft is owned is covered in your plan for compliance.
Aircraft LLCs May be Structured Differently
Aircraft and fractional interests are often owned in newly created LLCs that may be subsidiaries of other operating business entities or may be owned outside the main corporate structure by an individual, trust, or other business entity. If the aircraft LLC is owned outside of the main corporate structure, then it may not qualify for the same exemption to the reporting requirement that would apply to other entities in the main structure.
The Subsidiary Exemption May Not Apply to the Aircraft LLC
There are twenty-three (23) types of entities that are exempt from the reporting requirements under the Corporate Transparency Act, one of which is subsidiaries of certain other exempt entities. In practice these exemptions may apply to a large portion of operating business entities, but that may not always be the case for an aircraft LLC. For example, if the main operating business qualifies for the large operating company exemption under 31 U.S.C. § 5336(a)(11)(B)(xxi), then its subsidiaries may also be exempt from the reporting requirement. However, if the aircraft is owned in an LLC that is owned individually by the CEO, then a separate analysis is needed to determine if the aircraft LLC is exempt, as it does not fall under the umbrella of the exemption for the main operating business.
Who is Handling Compliance for the Aircraft LLC?
The affairs of entities created solely to own aircraft and fractional interests may not be routinely handled by the same individuals who manage compliance for the main operating business, especially if the LLC is owned outside of the main operating business structure. Be sure to coordinate and confirm that compliance for the aircraft LLC is being handled.
Guidance on reporting requirements, exemptions, and deadlines can be found at the Financial Crimes Enforcement Network Beneficial Ownership Information webpage.
The attorneys at Jetstream Aviation Law can be a valuable member of your aircraft team, providing expertise in spotting and resolving the issues that may cause future problems. Our law firm does not advise on or assist with Corporate Transparency Act filings.
The information provided here is not legal advice and does not purport to be a substitute for advice of counsel on any specific matter. For legal advice, you should consult with an attorney who handles Corporate Transparency Act matters and discuss your specific situation.
