Under a provision of President Bush’s economic stimulus package, purchasers of new aircraft can take a first-year depreciation deduction of 30 percent for the taxable year in which it is placed in service. H.R.3090, “The Job Creation and Worker Assistance Bill of 2002,” included a 30-percent bonus depreciation provision on the value of certain capital assets for 36 months.
Section 179 depreciation deduction
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.
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.
The House of Representatives approved the American Jobs Creation Act of 2004 (H.R.4520) on June 17, paving the way for a one-year extension of the time allotted to place into service business aircraft purchased under the accelerated-depreciation tax bonus.
Personal use of corporate aircraft is coming under increasing attack by Congress.
A bill has been submitted in the House of Representatives that seeks to restrict a company’s ability to deduct certain portions of a flight conducted for personal use.
Titled the Corporate Jet Tax Shelter Reform Act of 2004, H.R.4352 was referred to the House Ways and Means Committee for further action.
The General Aviation Manufacturers Association has launched a campaign to extend the accelerated-depreciation schedule on new capital equipment–including business aircraft–which it calls a “defining factor” in $2 billion in jet sales. GAMA also wants to increase the period of time between the aircraft purchase date and when it has to be placed in service to qualify for the added tax incentive.
Taxes–when, where, how and why they must be paid–and how to avoid them captured a major share of attention among the users and providers of business aircraft transportation attending the fifth annual Conklin & de Decker aircraft acquisition planning seminar in Scottsdale, Ariz., this fall.