Lawmakers urge Congress to extend bonus depreciation
Two congressmen have sent a letter to the House Ways and Means Committee asking the tax-writing body to extend the bonus depreciation incentive for noncommercial aircraft purchases.
Under bonus depreciation, companies and individuals were allowed to claim an additional depreciation of up to 50 percent during the first year after purchase on capital equipment used primarily for business and placed in service by the end of last year.
“As you know, the Ways and Means Committee included an extension of bonus depreciation for 2009 general aviation aircraft orders in the American Recovery and Reinvestment Act [Arra],” Rep. Todd Tiahrt (R-Kan.) and Rep. Chris Carney (D-Pa.) wrote. “Although the industry is still seeing a decline in new orders, manufacturers have reported that the bonus depreciation provision was a deciding factor in many of the orders they did receive. In fact, one manufacturer reported that 55 percent of the piston aircraft orders it received last year were attributed to bonus depreciation.”
The bonus depreciation provision included in Arra expired on Dec. 31, 2009. Extending it for aircraft purchases through Dec. 31, 2010, and permitting an in-service placement through Dec. 31, 2011, will provide a critical incentive for customers and help offset the continued softness and erosion in the general aviation market, they told the committee.
Like other domestic manufacturing industries, the GA industry is feeling the effects of the recession, the two lawmakers said, adding that sales of piston aircraft declined by 55 percent last year, and overall industry billings were down by 21 percent. In addition, general aviation manufacturers have had to cut nearly 20,000 jobs since the end of 2008 due to the decline in new orders.