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Answers for Pilots: Tax tips for aircraft ownersAnswers for Pilots: Tax tips for aircraft owners

Whether you are considering buying your first airplane or you are a seasoned aircraft owner, tax considerations are an important aspect of ownership. Aircraft owners who used their aircraft for business purposes in 2015 may be eligible for income tax deductions.

Late in 2015, legislation was passed extending Section 179 expense deductions and bonus depreciation for qualifying aircraft owners who use their aircraft for business purposes. Known as PATH (Protecting Americans from Tax Hikes Act of 2015), the maximum deduction is $500,000 for qualifying aircraft placed in service in 2015. Bonus depreciation also got a green light for extension through 2019 for aircraft placed in service in the years 2015 to 2019. Those businesses that qualify can depreciate 50 percent of the cost of the aircraft if purchased and placed in service during 2015, 2016, or 2017. The depreciation is reduced to 40 percent for 2018 and 30 percent in 2019.

In other tax news, the IRS Office of Chief Counsel released a Chief Counsel Advice memorandum clarifying standards for like-kind exchanges of aircraft. The memorandum specifically advises that field auditors should not use hobby loss standards (requiring a profit-making motive) when determining whether an aircraft owned by a special-purpose entity is eligible for a like-kind exchange. For more information on the PATH legislation, and on the IRS case, please read this article, written by Ray Speciale, CPA and attorney with AOPA’s Pilot Protection Services.

If you have questions about aircraft ownership or another aviation-related topic, give us a call at AOPA, Monday through Friday, 8:30 a.m. to 6 p.m. Eastern Time, 800/USA-AOPA (872-2672) or email [email protected].

Kathy Dondzila

Kathleen Dondzila King

Manager, Technical Communications, Pilot Information Center
Technical Communications Manager, Kathleen Dondzila King, joined AOPA in 1990 and is an instrument-rated private pilot.
Topics: Ownership, Financial, Aviation Industry

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