Page 12 - January 23

2023 Tax Incentives for Business Aircraft
by Daniel Cheung, CPA
Bonus depreciation continues to impact purchase decisions of many taxpayers. While the general rule is 80% bonus depreciation for business assets, business aircraft may qualify for 100% bonus depreciation in 2023.
If you have signed a purchase agreement prior to 2023 and made a non-refundable deposit of at least $100,000 – you qualify to take 100% bonus depreciation in 2023 when the aircraft is delivered.
Due to an oversight on the drafting of the legislation in 2017, 100% bonus depreciation may be available for any business aircraft acquired in 2023, if you follow the literal reading of the statute as written. Ultimately, your CPA handling your tax preparation and filing will decide whether to rely on 100% bonus depreciation in 2023 due to this technicality.
10 • KING AIR MAGAZINE
If 80% bonus depreciation is taken in 2023, the remaining 20% of the acquisition costs will be depreciated over the useful life of the aircraft, which is six tax years for aircraft operated under Part 91.
Something else to look into is “Section 179 Expensing,” which is available for aircraft under a $4.05M purchase price. This expensing provision allows up to $1.16M of the purchase price of an aircraft to be deducted in the year of acquisition. Earned income and non-aircraft equipment purchases can impact the amount of expensing available.
JANUARY 2023