Guess Who’s Paying for that Corporate Jet?
May 10th, 2006 | By Jared BlankThe NY Times has a good article today about executives’ use of corporate jets for personal business. Oh, and you’re not going to be surprised to hear who’s paying for the use of those jets. Uh, you are. Well you are if you’re a shareholder of the company. In the past, the company could write off the entire cost of the flight, even if an executive were using the plane for personal use. Now, when Dick Parsons, Time Warner’s CEO, wants to go visit his vineyard in Tuscany (not making that up), the company can only write off a tiny portion of the bill. But, here’s a crazy part. The full cost (depreciation, storage, etc) of using a corporate jet for 5 hours is about $45,000. If you only include direct costs (fuel, crew, etc), it’s about $15,000. Yet, in this case, because of some wacky formula, the use of the jet is only counted as about $800 of income for the exec. A $45,000 perk = $800 of income. Nice!