> On the other hand, if they were flying in a small airplane owned by one of them, it's illegal to split the costs of wear on the airplane, unless its a rental or air taxi.

This isn't true:

https://www.faa.gov/documentLibrary/media/Advisory_Circular/...

That AC and the regulations cited in it couldn't be clearer-- if you and the pilot are both going to $destination for $reasons, you and the pilot can definitely split the cost of the fuel.

Moreover, this is perfectly analogous to the carpooling example as you stated it-- two people both having a stated purpose traveling to a destination, both sharing the cost of gas/wear.

There of course could be ways to carpool where the passengers pay the total cost of the driver's gas/wear/etc. You can't do that in your airplane. But again, I think the reasons for this are glaringly obvious-- keep silicon valley from attempting to create an unregulated taxi service in the sky. (In fact, IIRC there was someone who tried over a decade ago-- perhaps these laws are a response to that?)

> Because of this, and other similar effects of FAA regulations, many small airplane owners own a company that owns the airplane, instead of owning it outright, and rent the airplane from themselves, whenever they use it.

I mean, the pilots I know who do that are either a) multiple people owning a single plane, or b) single owner literally running a rental taxi service. Who isn't covered by those two categories?

The op clearly stated wear, not fuel. Hourly rates on a plane will have a maintenance reserve, from tens to hundreds of dollars per hour. This cost can not be shared by a pilot. If the plane is owned by an LLC, and rents the plane to the pilot at a rate that includes the maintenance reserve, the cost of the rental CAN be split. So by putting the plane in an LLC, you can legally recoup the true cost from your friends.

It's pretty common for a single person to form a trust or LLC to buy an airplane, but it's mostly only worth the cost when the airplane is very expensive or when it's going to be used for commercial activity. I used the only example I could think of, off hand, that applies to non-commercial activity, because it's more relatable.

Also, I think it's worth mentioning that the advisory circulars, legal interpretations, and other letters the FAA writes aren't regulations, and it takes a ruling going to a federal court, not an FAA panel or tribunal, to set a precedent for what is and isn't legal. As far as I understand, this has never happened with FAR 61.113, which is a bit self contradictory and the FAA's overly broad definition of compensation where "the building up of flight time may be compensatory in nature if the pilot does not have to pay the costs of operating the aircraft" (https://www.faa.gov/media/15611) is extremely unlikely to ever hold up to a jury.