February 1, 2012
By Kathy Dondzila
There’s no getting around it—tax time is on the horizon! As you are gathering your paperwork and meeting with your tax advisor, remember that, if you used an aircraft for business (one that you either owned or rented), you may be eligible for possible deductions for the 2011 tax year. And if you purchased an aircraft, provisions from the 2010 small business jobs and tax bills extend through 2011 and may be advantageous to you if you used the new aircraft at least 50 percent for business. You also may be in luck if you upgraded the aircraft equipment in 2011, as the two main provisions of the bills include modified extensions of the bonus depreciation program and the IRS Section 179 expensing option.
Bonus depreciation for brand-new aircraft or new equipment in existing aircraft purchased in 2011 (actually, the purchase date can go as far back as Sept. 8, 2010) is 100% of its cost. Bonus depreciation continues into 2012, but drops to 50%.
The second component, IRS Section 179 expensing, can apply to either new or used business aircraft and aircraft equipment, and allows expensing of 100% of cost up to $500,000 of the first $2 million in taxpayer acquisition in 2010 and 2011, and, 100% of the first $125,000 of cost under $500,000 in taxpayer acquisition in 2012.
Flight training continues to be deductible if and when it is required by a current job or employer, or when it enhances current employment short of qualifying you for a new job. Read more in “The Pilot’s Guide to Taxes”.
Keep in mind, too, that the current low interest rates provide continuing incentive for financing a new or used aircraft. The AOPA Aircraft Financing Program provides information on financing and loans.
It’s important to get professional tax advice when you are exploring possible tax advantages, as even small tax code details can be significant. AOPA legally cannot and does not provide individualized tax advice—you’ll need to contact a tax advisor for that—but the association can help you find one. Give us a call Monday through Friday, 8:30 a.m. to 6 p.m. Eastern time, 800-USA-AOPA (872-2672).
Technical Communications Manager, Kathy Dondzila, joined AOPA in 1990 and is an instrument-rated private pilot.
A state-of-the art medical facility on remote Tangier Island in the Chesapeake Bay serves as a lasting memorial to the late Dr. David B. Nichols’ dedication to providing medical care to the community for 30 years. Now, Nichols’ aviation legacy—flying a Cessna 182 or Robinson R44 to the island every Thursday to provide that care—is set in stone.
The AOPA Medical Advisory Board is the latest group to urge quick action on the proposed FAA rule that would allow thousands more pilots to fly without the need for a third class medical certificate.
The Perlan Project is less than a year away from the first flight of a glider being built to ride waves near the edge of space. While construction continues in Oregon, the team’s pilots are staying proficient in more ordinary aircraft.
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