Federal Taxes

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Federal Tax News

NBAA Engaged in Latest SEC Disclosure, Tax Reform Discussions
Aug. 15, 2014
While Congress may be in recess for August, the policymaking work in Washington, DC continues throughout the summer, and NBAA remains focused on a host of issues relevant to business aircraft operators, including federal taxes. Recently, Scott O’Brien, NBAA’s senior manager for finance and tax policy, attended a congressional hearing on tax reform. The hearing, held by the House Ways and Means Subcommittee on Select Revenue Measures, covered dynamic scoring of committee Chairman Dave Camp’s (R-4-MI) discussion draft for tax reform, which was introduced in February. “While NBAA wasn’t at this hearing to testify for or against dynamic scoring, we were there because we know that changes in federal tax policy have real implications for American businesses,” said O’Brien, who also recently attended a U.S. Chamber of Commerce panel on Securities and Exchange Commission reporting. Learn more.
Interactive Panels Lead Off This Year’s NBAA Tax Conference
Aug. 14, 2014
The organizers of NBAA’s Tax, Regulatory & Risk Management Conference, set for Oct. 19 and 20 in Orlando, FL, are planning a new approach, and for the first time, the conference will begin with a series of interactive panel discussions called Ownership and Operating Structures 101 to 103. “We’re trying something different to start the conference this year,” said Scott O’Brien, NBAA senior manager for finance and tax policy. “While we have certainly covered these topics at prior conferences, these three sessions will be directly linked together. The idea is to make clearer connections between operational, regulatory and tax issues.” Read more about NBAA’s Tax, Regulatory and Risk Management Conference.
NBAA Resource Clarifies Net Investment Income Tax Regulations
July 11, 2014
The Treasury Department and the IRS recently published final regulations implementing the net investment income tax (NIIT), which was enacted as part of the 2010 healthcare overhaul. The NIIT imposes a 3.8-percent tax on the investment income of certain individuals, estates and trusts. The final regulations revise and clarify several issues in the 2012 proposed rules that will affect many common airplane leasing arrangements. The NBAA Tax Committee has prepared a new resource on the final NIIT regulations for Members. Review the NIIT Article.
IRS, Treasury Department Release Priority Guidance Plan
August 19, 2013
Two tax issues that affect many NBAA Members have been included in the 2013–2014 Priority Guidance Plan released by the Department of the Treasury and IRS. First, NBAA, in collaboration with NATA, succeeded in urging the IRS and Treasury to list developing guidance on the application of federal excise taxes to aircraft management fees in the guidance plan. Second, the plan proposes to address the "leasing company trap," which unfairly penalizes aircraft owners that lease an aircraft to related parties for legitimate business reasons. Learn about the Priority Guidance Plan.

Federal Excise Taxes

Both private and commercial business aircraft operators pay Federal excise taxes (FET) either on fuel or on the transportation of persons or property. This section provides information on FET applicability, current tax rates, and best practices for collecting and remitting the tax. Learn More

Depreciation

Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS) or the Alternative Depreciation System (ADS). Learn More

Passive Activity Loss

Individual taxpayers must aggregate the income and loss from their passive activities each year to determine their net passive income or loss. A net passive loss for the year generally is nondeductible for that year but may be carried forward to reduce net passive income in future years. Learn More

Charitable Flights

Many businesses generously make their aircraft available for charitable flights. Prior to doing so, it is important to know the FAA and IRS rules applicable to these flights and any tax deductions the company might want to take associated with the contributions. Learn More

Hobby Loss Rules

Business owners can use different legal entities, including C corporations, S corporations, partnerships, and LLCs. Although these arrangements generally do not create income tax benefits, the depreciation rules often cause the entity owning the aircraft to have a tax loss. IRS auditors can disallow deduction of these losses, relying on the ”hobby loss’ rules. Learn More