Tax Change Helps Executives Afford Pricier Planes

The recent changes to the tax code are giving business executives a new perk: the opportunity to deduct the entirety of a corporate-jet purchase.

President Trump signed more than 100 changes to the U.S. tax code into law at the end of last year. Among them: The price of a new or used airplane purchased by a company can be a 100% write-off against its earnings.

That is a major change.

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.

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,

CONGRESS EASES MEDICAL REQUIREMENTS FOR PILOTS OF SMALL AIRCRAFT

A watershed moment for pilots of light aircraft occurred on July 15, 2016, when the President signed into law a major easing of medical certification requirements for light-aircraft pilots. This change was part of a periodic FAA Extension Act, and has major implications for pilots of small aircraft, who are relieved of some burdensome obligations of medical license compliance. The law instructs the FAA to issue regulations within 180 days implementing the new rules, and does not have practical effect until these regulations are finalized.

FAA ISSUES NEW AIRCRAFT LEASING GUIDANCE

In February 2016, the FAA, for the first time in nearly forty years, replaced its Advisory Circular on aircraft leasing. (AC91-37B (February 10, 2016), superseding and replacing AC91-37A (January 16, 1978).) The new guidance expresses the FAA’s continuing concern over arrangements where operational control is retained by the aircraft lessor, and that thus constitute de facto uncertificated air charter. Also included are some noteworthy additions, such as (a) a statement that the operational control concerns apply to aircraft of all sizes (even though the specific subject of the Advisory Circular relates only to large aircraft,