- What is Business Aviation?
- Flight Department Administration
- Aircraft Operations
- Professional Development
- News & Publications
- Products & Services
Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period. In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS).
Under ADS, depreciation is based on a straight-line method meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS.
There a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in commercial service (i.e. Part 135) are normally depreciated under MACRS over a seven year recovery period or under ADS using a twelve year recovery period.
Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six year recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year. With this in mind, operators are encouraged to review the resources on this page and work with qualified aviation tax and legal counsel to determine the best approach for depreciating business aircraft.
- News Outlets Again Challenge White House’s Business Aviation Tax Claims
- April 12, 2013
News organizations are not letting the White House's business aviation rhetoric and policy proposals go unchallenged. Already, The Washington Post and Politico have run articles or blog posts sternly questioning the Obama Administration's budget proposals targeting business aviation. The latest outlets to renew such questions are The Washington Times and Newsweek/The Daily Beast. For example, in an April 8 story, The Washington Times points out a simple fiscal reality about the president's proposal to change general aviation aircraft tax policies that NBAA has long made clear: The revenue produced by changing the policy "would amount to only a drop in the nation's deficit-reduction bucket." Learn more about national and local news outlets' investigations into the Obama administration's claims about business aviation.
- Chicago Newspaper Publishes Mayor’s Questioning of White House Business Aviation Rhetoric, Proposals
- April 1, 2013
Nicholas Helmer, mayor of the Chicago, IL suburb Prospect Heights, lent his voice recently to the others signaling support for business aviation, in light of claims put forth by the White House and its supporters concerning tax policies for business aircraft. President Obama has repeatedly called for altering the tax-depreciation schedule for non-commercial aircraft purchases from five years to seven years, a move the White House claims would raise approximately $3 billion in revenue over the next decade to help reduce the deficit. Responding to an op-ed in the Chicago Tribune favoring the altered schedule, Helmer countered that repeated calls to change the schedule are “one particularly confounding example” of policies that would be “hugely detrimental to the general aviation industry as a whole”. Read more of Helmer’s letter.
- National Newspaper Latest to Question White House Business Aviation Tax Rhetoric
- March 25, 2013
The Washington Post, a major national newspaper, last week turned its “Fact Checker” report to the White House’s tax proposals and rhetoric regarding business aviation and found both “misleading.” As Congress has debated ways to lower the nation’s deficit, the Obama administration has repeatedly called for changes to taxes on business aircraft purchases, even calling long-established tax policies a “loophole.” However, the Post’s Fact Checker found “this is not so much a loophole as a different way of depreciating the assets” that applies to many kinds of business equipment. Get the full details of the fact check on the White House’s proposals and comments regarding business aviation.
- Lawmaker Highlights Small Business Impact From Aircraft Tax-Change Proposal
- March 19, 2013
The possible negative consequences from altering the tax-depreciation schedule for general aviation aircraft were recently highlighted by Rep. Todd Rokita (R-4-IN) during a hearing on the proposed fiscal year 2014 budget. At issue was an amendment to a bill, sponsored by House Democrats, which would have altered the depreciation schedule for non-commercial aircraft purchases from five years to seven years. The White House has repeatedly called for an end to what the president terms the "corporate jet tax loophole," asserting the adjustment would yield $3 billion in additional revenue over the next 10 years. In the hearing, Rokita said the proposed amendment sought to "demagogue" business aircraft users, and would harm small business owners and general aviation pilots. Read more of Rokita’s defense of business aviation.
- NBAA Member Denounces Obama’s Business Aviation Policy Proposals
- March 13, 2013
A longtime NBAA Member is speaking out against a "counterproductive" proposal by the Obama administration to target business aviation with changes to tax-depreciation schedules on the purchase of aircraft. In an online piece published this month by Forbes magazine, Louis Seno, chairman emeritus of JSSI (Jet Support Services Inc.), argues that the proposal would do little to cut government red ink, but could impede the business aviation industry's gradual recovery from the 2008 economic downturn. Read more.
- Congressional Leaders Echo NBAA's Challenge to White House Mischaracterizations About Business Aviation
- February 11, 2013
NBAA's statement last week challenging claims from the White House about business aviation depreciation in the context of the debt-reduction and "sequester" debate came amidst comments from lawmakers on both sides of Capitol Hill, who also called into question why the administration was focusing on aircraft depreciation as a major consideration in reducing the nation's debt. For example, Senate Minority Leader Mitch McConnell (R-KY) noted in a Reuters op-ed that "The White House has predictably suggested politically driven tax hikes as appropriate offsets for the sequester, including a tax on corporate jets. If that sounds like a poll-tested PR gimmick rather than a serious solution, that's because it is." Rep. Mike Pompeo (R-4-KS) sounded a similar concern, stating in a Dear Colleague letter: "It is wrong to target the depreciation period for GA aircraft to advance a narrow political goal of class warfare." Read more about the defense of business aviation in Congress.
- Accelerated Depreciation Extended for 2013
- January 4, 2013
The American Taxpayer Relief Act of 2012, signed into law on January 2, 2013, further extends 50% bonus depreciation through the end of 2013. In general this means that new business aircraft purchased in 2013 are eligible to qualify for 50% Bonus Depreciation. If there is a written binding contract in place to purchase the aircraft by December 31, 2013 and the aircraft qualifies as "Certain Aircraft" or "Long Production Period" as defined in the Internal Revenue Code, the aircraft can be placed in service during 2014 and still qualify for 50% Bonus Depreciation. Learn More.
- Aircraft Acquired in 2012 May Still Be Eligible for Bonus Depreciation
- December 3, 2012
For some aircraft purchased in 2012, it may be possible to qualify for 100 percent accelerated or "bonus" depreciation, even when there was no written binding contract to purchase the aircraft in place before Jan. 1, 2012. Guidance provided in IRS Revenue Procedure 2011-26 indicates that an aircraft defined as "Certain Aircraft" or "Longer Production Period Property" can qualify for 100 percent bonus depreciation if acquired and placed in service in 2012, even without any written binding contract in place on Dec. 31, 2011. NBAA Members may log in to learn more about bonus depreciation.
- NBAA Submits Comments on IRS Deduction and Capitalization Regulations
- April 23, 2012
Recently, the IRS published temporary regulations that provide guidance on the application of sections 162(a) and 263(a) of the Internal Revenue Code to amounts paid to acquire, produce, or improve tangible property, including business aircraft and their components. Among other things, these temporary regulations provided certain bright-line tests (for example, a de minimis rule for certain acquisitions) as well as guidance regarding the accounting for, and dispositions of, property subject to Internal Revenue Code section 168. The temporary regulations became effective on January 1, 2012. NBAA submitted technical comments last week, addressing tax treatment of inspection and maintenance programs, aircraft repairs and overhauls, the routine maintenance safe harbor, deductions on previously owned aircraft, and restorations. Review NBAA's Comments (100 KB, PDF).
- NBAA to Meet With Treasury Department on Depreciation Concern
- December 5, 2011
Representatives from NBAA's Tax Committee will meet with the U.S. Department of Treasury this week to discuss concerns about a trap for aircraft owners created by IRS guidance. IRS interprets a provision in Section 280F in a manner that could cause legitimate business flights to be treated as personal flights for purposes of determining whether the aircraft is eligible to be depreciated under the Modified Accelerated Cost Recovery System (MACRS) when the aircraft is leased to a 5-percent-or-more owner or related party. Common business aircraft ownership and leasing structures are subject to this interpretation. Learn more about this tax issue.
Bonus Depreciation has been extended for 2011 and may allow aircraft owners to realize the depreciation benefits of an eligible asset more quickly. Lean More.
- NBAA Comments on Proposed IRS Deduction and Capitalization Rules
- FedEx Wins Off-Wing Maintenance Case (December 2003)
- Depreciating Corporate Aircraft (June 2001) by Troy A. Rolf, Galland, Kharasch, Greenberg, Fellman & Swirsky, P.C.
- "Deductible Expenses for Meals: The Sleep or Rest Rule" article by Mark Burris, Executive Jet
- IRS Revenue Ruling 2001-4: Capitalization vs. Expensing of Airframe Repairs