By: Letisha D. Bivins
State taxes are often overlooked in general aviation. Whether you use your plane for business or just for personal pleasure, there are state taxes that may apply to your plane in one or more forms. Forty-four states impose sales and use tax on planes. In addition, 42 states impose annual personal property tax and/or registration tax on planes.
I often hear, “I took delivery in Oregon,
» Read more about: Overlooked & Misunderstood – The Basics of State Aircraft Taxes »
As we approach the last quarter of 2019, market indicators support the possibility of a very strong year-end in aircraft transactions. If you have not purchased or sold an aircraft since the passage of the Tax Cuts and Jobs Act (TCJA) of late 2017, a review of how changes in the tax law may impact transactions for the balance of the year is in order. Similarly, if you are contemplating selling your aircraft, upgrading, bringing in a partner,
» Read more about: Five TCJA Tips for Year-End Closings in 2019 »
Bankruptcy Court Affirms a Taxpayer’s Ability to Take General Aviation Deductions for Aircraft that Supports Another Business
General aviation owners and operators are well acquainted with the ability of aircraft to build, support, and grow business operations of all sorts. The clients of our firm conduct myriad business operations ranging from farming to consulting, oil and gas to software, entertainment to medicine. They are as diverse as the economy itself. Meeting travel needs and allowing flexibility are essential roles for general aviation aircraft,
» Read more about: Business Flying and Taxes: What is Business Activity? »
During past budget shortfalls, aircraft have been the target of securing additional revenues through the aggressive collection of sales, use, and property tax.
The portability of aircraft can make it easy to avoid sales tax on the purchase by closing in a jurisdiction with little or no tax, or an applicable exemption, but that is only the first step. Use tax generally becomes a significant hurdle in the state or states in which the aircraft is based.
The Tax Cuts and Jobs Act has provided an incredible opportunity for business aircraft owners to purchase aircraft, both pre-owned and new, to begin or strengthen their fleets. Aircraft placed in service in 2018, and the next four years moving forward, even in the final days of the year, may be eligible for 100% bonus depreciation – a deduction of the full aircraft purchase price – provided that the aircraft meets the qualified business use requirements outlined in the statute and regulations.