Aircraft Income Tax | Advocate Consulting Legal Group, PLLC - The Aviation "TLC" Provider

A New Era in Business Aviation: Highlights from the Tax Cuts and Jobs Act

After years of debate, tax reform has arrived. The late-year 2017 passage and signing of the Tax Cuts and Jobs Act (TCJA) has reshaped the business and individual tax landscape. The TCJA provides excellent tax opportunities for businesses of all sizes to invest in general aviation aircraft, but requires careful planning and review to ensure that deductions are preserved. Below you will find a few highlights of the new law, along with discussion points to consider with a trusted advisor.

BUSINESS AIRCRAFT AND TAX REFORM: 2017 OUTLOOK

Potential Cuts to Business Taxes May Make Deductions More Valuable This Year

One of the central promises of the new administration has been long-awaited tax reform. President Trump has promised imminent executive action outlining the tax reform priorities that he will pursue, and with a Republican Congress in place, some version of tax reform is likely either in 2017 or in early 2018[1]. While it is difficult to “read tea leaves” there are some commonalities between the Congressional tax reform agenda and the campaign promises of the President that signal significant relevant changes to corporate and small business taxation.

Tax Trap for 2011 – Failure to Elect Grouping of Aircraft Company and Operating Company

Second in a series of articles on “How to Survive an IRS Audit of your Aircraft”

There are many valid business reasons to separate aircraft ownership from the operating companies it serves. These often include liability protection, ownership differences, and managerial issues to name a few. Although it is often beneficial to segregate ownership for non-tax reasons, it is important to avoid inadvertently causing the aircraft entity to be treated on a “stand-alone” basis for passive activity income tax purposes.

BONUS DEPRECIATION AND ENHANCED 179 EXPENSING ELECTION, COUPLED WITH POTENTIAL RATE CHANGES, MAKE YEAR END 2016

A Great Time to Invest in Business Aircraft and aircraft upgrades

Potential drop in flow-through tax rates for small businesses from 39% to 15% or 25% may make the value of deductions substantially exceed the expected recapture at sale
179 Expensing Election of $500,000; phase out starts when equipment purchases exceed $2,000,000.
50% Bonus depreciation for factory new equipment

Potential Cuts to Business Taxes Make 2016 Deductions More Valuable This Year

With the inauguration of President Elect Donald Trump just around the corner,

BONUS DEPRECIATION AND ENHANCED §179 EXPENSING EXTENDED TO 2015 AND BEYOND

179 Expensing Election of $500,000; phase out starts when equipment purchases exceed $2,000,000.
50% Bonus depreciation for factory new equipment

In a welcome display of good governance, Congress this year has largely broken its recent routine of allowing important tax incentives to expire with the start of each new year, only to retroactively reinstate those provisions as year-end approaches—leaving taxpayers during the interim on tenterhooks, guessing what tax laws they will be subject to.