When President Bush last month signed a tax law that extends the “placed-in-service” deadline to the end of next year for new aircraft buyers to qualify for the 50-percent bonus-depreciation allowance, he also enacted a provision of the new law that isn’t such good news. NBAA noted that the new tax law sets more stringent limits on expenses a company can deduct when there is personal use of an employer-provided aircraft.
Both houses of Congress passed a bill that extends until December 31 next year the “placed-in-service” deadline for business aircraft purchased on or before December 31 this year to qualify for a 50-percent bonus depreciation allowance. It became law when President Bush signed the bill on October 22.
At the NBAA Convention last month, credit for a recent increase in used aircraft sales was frequently given to the bonus depreciation benefit that is part of the Jobs and Growth Tax Relieve Reconciliation Act that went into effect this year. “It has already been a boost to used aircraft sales, and it is going to affect new aircraft sales,” said a sales executive at the convention.
President Bush planned to sign legislation that will increase from 30 percent to 50 percent the first-year depreciation allowance for capital goods, including aircraft. The provision, part of the Jobs and Growth Tax Act of 2003 passed by Congress late last month, “should be a big boost to general aviation,” said General Aviation Manufacturers Association president and CEO Ed Bolen. “This is a real financial incentive to buy airplanes now.”
“The FAA, and the IRS…they really don’t think alike,” began tax attorney Gary Garofalo, first speaker at the NBAA Federal Aviation Tax Forum in Arlington, Va., on May 7. Some 80 specialists, accountants and financial officers attended the most advanced forum the NBAA tax committee has held on aircraft taxation.
A one-year extension of the accelerated bonus depreciation for general aviation aircraft purchases was included in S.1637, the Jumpstart Our Business Strength (Jobs) Act, which the Senate passed by an overwhelming 92-5 vote last month. The next step is for the House of Representatives to pass similar legislation.
Pushed by President Bush for legislation intended to stimulate the nation’s economy, Congress has taken action on two bills that may affect the purchase of new aircraft by boosting depreciation deductions. While the bills use the term “qualified property” as eligible for depreciation deductions, new aircraft could possibly fit that definition.
Conklin & de Decker (Booth No. 1241) announced the release of its Life Cycle Cost Version 7.2 aircraft budget analysis software, including a new “maintenance cost matrix” that lets users view maintenance costs in five-year increments. The feature provides a better picture of predicted budget adjustments as an aircraft gets older, according to the company.
If you are thinking of starting a business aviation charter or management company, consider sending as many of your company’s managers as possible to Conklin & de Decker’s Commercial Operators & Management Tax Course. The two-day seminar goes into great depth about the myriad subjects that any charter/management company will eventually encounter.
The tax committee of the NBAA will host two events in conjunction with its 57th annual meeting and convention in Las Vegas in October. The NBAA 13th Annual Tax, Regulatory & Risk Management Conference (previously known as the NBAA Tax Conference) is scheduled for October 10 and 11 at the Las Vegas Hilton.