Comments on: What’s the economic reality in the aircaft market?

By: Small Business Tax Guru

Small Business Tax Guru — Mon, 23 Nov 2009 03:46:04 +0000

I’ve been involved in taxations for lengthier then I care to admit, both on the individual side (all my working life-time!!) and from a legal point of view since satisfying the bar and pursuing tax law. I’ve offered a lot of advice and righted a lot of wrongs, and I must say that what you’ve put up makes impeccable sense. Please continue the good work – the more people know the better they’ll be armed to deal with the tax man, and that’s what it’s all about.

By: Rodney Martz

Rodney Martz — Mon, 10 Nov 2008 19:02:51 +0000

Hi Kevin,
Rodney, here, from AOPA’s Pilot Information Center. The devil is in the details, of course, but no 2007 delivery would qualify for Bonus depreciation. You could trade for a new aircraft now, for 2008 delivery or, for 2009 delivery if the aircraft was built in 2008.

The bigger question though, is: is the faster depreciation worth the effort?, i.e. remember we are only talking about faster depreciation – not more depreciation. Critical to any ‘time-value-of-money’ calcualtion is: do you have both business motive AND profit to offset with the faster early depreciation. You need to discuss carry-backs with your tax professional.

To answer your last question, yes, a leasing business as an LLC ‘could’ qualify for the bonus depreciation this year. You must understand, however, that IRS demands a profit 3 years out of 5- not counting depreciation. This aircraft must be part of a serious profit taxpaying entity, there are no free lunches. Fail to show profit and the IRS can recapture with interest and with penalties.

Regards.

By: Tom Haines

Tom Haines — Mon, 10 Nov 2008 16:41:06 +0000

Kevin,
Your best bet–by far–is to talk to an attorney familar with the tax laws. If you are a member of the AOPA Legal Services Plan give the plan a call as a first step.
–Tom

By: Kevin McGinty

Kevin McGinty — Mon, 10 Nov 2008 02:53:27 +0000

Tom, thanks for your article dated Nov 7 w/regard to 2008 Bonus Depreciation subject. I purchased a new Cessna 182T last December from the factory in KS. I am trying to understand the legal details of this package and whether or not it is extended into 2009. I am also on the cusp of being able to do this as my purchase was made in Dec of 2007–are there any exceptions given that the purchase was a couple of weeks away from 2009? Also, If I were to form a LLC and have 2-3 other pilots in my group and i actively managed the leasing of the plane–would this be a viable way to take advantage of the 50% depreciation law? I will be contacting a tax person on this in the coming week but thought you might have a better understanding than I do before I start looking into it. I am not against selling this aircraft and purchasing a new one if this scenario is realistic. Thanks Tom! Kevin in Boston.