Under the Proposed Regulations, a deadhead flight is a flight on an aircraft returning without passengers after discharging passengers or flying without passengers to pick up passengers.
The Proposed Regulations do not provide clear guidance, however, for the more complex situation where the deadhead flight occurs between two unrelated flights involving more than two destinations, such as an occupied flight from City A to City B, followed by a deadhead flight from City B to City C and then an occupied flight from City C to City A.
The regulations include examples illustrating the computation of expenses for deadhead flights
1.274-10(f)(3) also provide guidance on the treatment of empty flights to pick up passengers or empty return flights after dropping off passengers (deadhead flights).
* Deadhead flights after a specified individual has taken a long flight for entertainment purposes should be avoided at all costs.
One of the more administratively troubling aspects of the Notice is the rule designed to capture the costs associated with "deadhead flights." Under the Notice, companies must account for the costs associated with deadhead flights in the total allocation of expenses.
(25) Deadhead flights attributable to personal flights are not valued for income inclusion purposes under Treas.
In addition, planning can reduce the deduction limit for deadhead flights
. Under the notice, the cost of an empty plane after discharging passengers or before picking them up equals the cost of the portion of the flight that held passengers.This could potentially create a large deduction disallowance, depending on how far the plane travels for personal use when boarded and how many travelers are aboard.