Page 16 - Volume 12 Number 1

News Update
by Kim Blonigen
Tax Reform Bill Signed into Law Commended for Aviation-related Provisions
The new tax overhaul package referred to as the “Tax Cuts and Jobs Act” was signed into law by President Trump on December 22, 2017. Two key provisions that aviation leaders are praising are the immediate expensing of both factory-new and pre-owned (used) aircraft, as long as it is the taxpayer’s first use of the aircraft. Businesses had been depreciating aircraft over a five-year period, and it did not include used aircraft.
Under the legislation, starting in 2023, there will be a phasedown of bonus depreciation in increments of 20 percent each year for qualified aircraft purchased and placed into service before January 1, 2027.
The other aviation-applauded provision for the general aviation industry is the managed aircraft
measure, which has been a disputed item over airline ticket taxes being improperly imposed on aircraft management fees. Under the new legislation, business aircraft owners that hire a management company to provide support services will pay the non-commercial aviation fuel tax, and not the 7.5 percent Federal Transportation Excise Tax.
The tax legislation does repeal the “like-kind” exchanges for business property, in which businesses could defer taxes on sales of equipment if they were purchasing new equipment. According to the NBAA, it “plans to work through a broad coalition to seek an extension of immediate expensing and the reinstatement of like-kind exchanges of business equipment.”
14 • KING AIR MAGAZINE
JANUARY 2018
AVIATION ISSUES