Depreciation

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Bonus Depreciation

January 4, 2013

In general terms, Bonus Depreciation may allow aircraft owners to realize the depreciation benefits of an eligible asset more quickly. Aircraft owners are not entitled to more depreciation, but are allowed to obtain the benefits of depreciation more quickly. When available, Bonus Depreciation can be utilized by owners of many capital assets and is not an aviation specific benefit.

The Small Business Act of 2010 contained provisions that extended Bonus Depreciation through the end of 2010. Under the Act, 50% of the cost of Bonus Depreciation eligible property could be deducted in the year the property is acquired. The remaining 50% of the cost or “basis” remains eligible for depreciation in future years according to normal depreciation rules.

Congress also passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 – which allowed businesses 100-percent accelerated, or "bonus" depreciation of investments in capital assets, including new aircraft, through December 31, 2011, retroactive from September 8, 2010. The legislation also provided for a Bonus Depreciation allowance of 50% during 2012.

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 about the Extension of 50% Bonus Depreciation.

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