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,
The 2017 Tax Cuts and Jobs Act provides a wonderful opportunity for business aircraft purchasers of both new and pre-owned aircraft to take 100% bonus deprecation on the aircraft purchase price in the year of acquisition pursuant to Section 168(k), provided that the aircraft is placed in service for business use in that year. This purchase incentive, designed to spur economic activity in equipment sales, can serve as a valuable tool to free up capital and encourage business investment and activity.
“T and E and out by three,” is a long-standing adage among IRS agents, reflective of the fact that Congress has elevated the recordkeeping requirements for travel and entertainment expenses, and auditors honed-in on these technicalities may be able to make quick adjustments leading to hefty tax bills. The rules do not uniquely target aircraft. Instead, all travel deductions—irrespective of the means of transportation—are subject to enhanced documentation requirements. Failing to meet these technicalities can mean disallowance of expense deductions,