February 9, 2012
By Jim Moore
A valuable tax incentive for business aircraft owners has scaled back for 2012, and a coalition of manufacturing groups led by the National Business Aviation Association (NBAA) is urging Congress to keep “bonus depreciation” intact.
More than 60 businesses and organizations co-signed the letter to lawmakers, noting the tax law gives businesses that might otherwise be unable an opportunity to purchase aircraft that keep them globally competitive, and that demand for aircraft directly creates jobs.
Under legislation enacted in 2010, businesses are allowed to use 100 percent of an aircraft’s depreciation in the first year to reduce total tax liability. Previously, business aircraft owners could only claim 20 percent of the depreciation in a year. In 2012, under current law, only 50 percent can be deducted in a single tax year.
“The business aviation community still faces economic headwinds, and we should not take an important tool like this one out of the toolbox for growing jobs and helping businesses acquire the assets they need to compete in a global marketplace,” NBAA President and CEO Ed Bolen said in a news release. “We call on Congress to extend the 100-percent accelerated depreciation for another year.”
An extension of the 100-percent depreciation rule was included in a House bill extending the payroll tax cut (H.R. 3630), and a joint House-Senate conference committee is currently considering the legislation.
The letter, sent Feb. 2 to the leaders of the conference committee, notes that the rule does not reduce tax liability, but simply changes the timing to allow taxpayers to benefit without delay.
NBAA and other supporters also are asking Congress to include language holding the tax incentive harmless from long-term accounting methods under I.R.C. Section 460, and allowing eligible companies to claim a portion of their unused Alternative Minimum Tax (AMT) credits in lieu of bonus depreciation.
AOPA Online Associate Editor Jim Moore joined AOPA in 2011 and is an instrument-rated private pilot who enjoys competition aerobatics.
National Business Aviation Association
AOPA is testing whether aircraft ownership can be more affordable than many people believe with the development of “Reimagined Aircraft.”
Over the past several years, the Aircraft Owners and Pilots Association (AOPA) developed its digital flight planning tools into a suite of products that put flight planning capability, airport directory information and aviation weather in pilots’ hands. AOPA partnered with Seattle Avionics to create FlyQ EFB, an electronic flight bag (EFB) iPad application, and FlyQ Pocket, a smartphone application.
AOPA is exiting the electronic flight bag (EFB) market, and the association’s existing products will transition to Seattle Avionics.
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