The "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" provides significant tax benefits for American businesses in an effort to stimulate the economy. These unprecedented tax incentives, in the form of increased expensing opportunities and up to 100% accelerated depreciation in the year the asset is placed in service, create an excellent opportunity for companies currently using, or thinking about using, general aviation aircraft for business purposes.
"At the end of last year, Congress passed and President Obama signed into law a bill with unprecedented economic stimulus provisions for business aviation," said Mike Nichols, NBAA vice president, operations, education & economics, in an NBAA webinar presented January 13, 2011 on the tax benefits of the new law.
As Nichols noted, the "Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010" contains several provisions with significant tax benefits for companies considering an investment in business aircraft in 2011, including 100 percent "bonus depreciation" and extension of increased Section 179 expensing.
How to Take Advantage of These Benefits
Wolcott advised that all forms of depreciation and expensing are reduced by the percentage of non-business use of the aircraft. For that reason, Kammerer advised that companies take a long view and anticipate the personal use profile of an aircraft over its five- or seven-year depreciation lifespan before electing to take advantage of bonus depreciation.
"Does simply acquiring an asset and placing it into service guarantee it qualifies for 100 percent bonus depreciation?" Kammerer asked at the conclusion of the webinar. The answer, he said: "Maybe, but the devil is in the details."