If you’re buying or updating an airplane used in business, the stimulus measure signed by President Obama last month includes good news for you. The measure, officially called the American Recovery and Reinvestment Act of 2009, extends the special 2008 tax incentives for aircraft purchases used in a business or leasing situation. And the incentives are retroactive to Jan. 1, so that any qualifying 2009 purchase and delivery could be covered.
If you buy a brand new aircraft costing more than $200,000, you may elect to take 50 percent bonus depreciation, in addition to the standard MACRS cost recovery. The bonus depreciation also may be available for improvements such as a new engine or new avionics in an aircraft you already own.
Eligible business taxpayers may take a 100 percent first-year deduction of up to $250,000 on new or used aircraft purchases or capital improvements costing up to $800,000, with a dollar-for-dollar reduction in the deduction between $800,000 and $1,050,000 of cost.
In addition, the measure extends net operating loss (NOL) carry-back provisions for small businesses from two years to five years for any taxable year ending during 2008 or 2009.
Beneficiaries of these incentives could include small businesses and corporate owners, aircraft lessors, flight schools, charter companies, cargo operators, banner tow operators, aerial sightseeing businesses, agricultural operators, natural resources contract operators, aerial photography operators, and traffic reporting companies.
For more information about these and other tax issues, see AOPA’s Pilot’s Guide to Taxes.
As always, you are urged to contact your tax advisor for answers specific to your tax situation. If you need help finding a tax professional with aviation experience in your area, call AOPA's Pilot Information Center at 800/USA-AOPA (872-2672). AOPA is not authorized to provide tax advice.