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You are here: Home / Aircraft Tax Savings by Make & Model / Evolution

Written by Greg Harper

Evolution

To Maximize Deductions The Taxpayer Must Place Aircraft in Service in 2013

Current tax law provides for both bonus depreciation and an enhanced expensing election available to new aircraft purchasers.  Fifty percent (50%) bonus depreciation is available for all new aircraft, including fractional interest, that are used primarily for business.  The enhanced expensing election of $500,000 applies to new or used aircraft placed in service by “qualifying small business” taxpayers.  A qualifying small business is one that invests less than $2,000,000 in total equipment purchases during the year.  The 50% bonus depreciation generally applies only to 2013 but may be available for certain new aircraft purchased in 2013 under a binding agreement and delivered in 2014.  Here is how the provisions are impacted on a 2013 purchase of a new EVOLUTION.

 

Here is how the income tax deductions are calculated for a $750,000 aircraft:

 

EVOLUTION  
 

2013 Delivery

Cost

$750,000

Expensing Election

$500,000

Bonus Depreciation

$125,000

Regular Depreciation

$25,000

Total 1st year deductions

$650,000

Percent deductible

87%

 

The new law contains an ordering provision that provides that the expensing election be taken first.  Bonus depreciation is calculated by computing 50% of the balance of the basis remaining after the expensing election.  Regular depreciation is computed on a 5-year basis using the modified accelerated cost recovery method, generally 20% in the first year.  Aircraft ownership structuring is also impacted by unique FAA rules, sales tax issues, and liability concerns which must be blended with these new tax rules.  For further details see our Aircraft Depreciation calculator at http://109.73.238.163/~advoca53/depreciation/formDepSav.php.

Filed Under: Aircraft Tax Savings by Make & Model Tagged With: aircraft bonus depreciation, Aircraft Deductions, aircraft depreciation

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Advocate Consulting Legal Group, PLLC. 3530 Kraft Rd. Suite 203 Naples, FL 34105 and 1300 N. Westshore Blvd. Suite 220 Tampa, FL 33607. Suzanne Meiners-Levy, Esq. (239) 213-0066. Tax Disclosure. We inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under federal tax laws, specifically including the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.Privacy Policy. Terms of Use.