Page 5 - Volume 12 Number 2

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tax benefits can help a company justify the addition of an aircraft as an essential business tool. In this article we will discuss the various tax provisions that will affect the decision to purchase and operate a business aircraft.
1. 100 percent bonus depreciation – this provision applies to all new and used business aircraft. Immediate expensing is available in the year of acquisition.
Depending on your income tax situation, the new tax plan allows you to depreciate your aircraft 100 percent in one year or a lower percentage on a more traditional schedule.
2. Section 179 Expensing increases to $1 million, with phase-out beginning at $2.5 million.
3. Entertainment use of a business aircraft is no longer tax deductible.
4. Elimination of Section 1031 Like-kind Exchange for business aircraft; recapture of tax depreciation is immediately taxable as ordinary income.
Bonus Depreciation
A tax incentive first introduced in 2001, Bonus Depreciation has always been a valuable tax incentive for businesses aircraft acquisitions. Instead of depreciating an asset over five or seven tax years, a taxpayer can elect to depreciate 100 percent of the acquisition costs or improvements to a business aircraft. This incentive, from its inception, has always only applied to new aircraft, to stimulate demand and create manufacturing jobs. With the implementation of TCJA, Bonus Depreciation has been extended to new and pre-owned aircraft; and 100 percent bonus depreciation is in effect until tax year 2022. It will then begin a phase-out of 20 percent annually.
FEBRUARY 2018
KING AIR MAGAZINE • 3
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0-100% Depreciation