2018 Aircraft Ownership & Bonus Depreciation
Now is the time to Purchase an Aircraft & Maximize Your Income Tax Savings!
In order to maximize your income tax savings, it would be advantageous for you to purchase an aircraft in 2018. This will allow you to take bonus depreciation deductions this year, which will result in a higher income tax savings for you immediately.
The following illustration is based on the purchase of a new Piper M600 at $3,050,000, based on 100% business use, utilizing the Section 179/MACRS and/or 100% bonus deprecation:
Purchase Date |
December 2018 |
| Section 179: Cumulative Depreciation through December 31, 2018 |
$580,000 |
Section 179: Potential 1st -Year Income Tax Savings |
$232,000 |
Section 179: Total Potential Income Tax Savings based on 40% marginal tax bracket |
$1,220,000 |
Purchase Date |
December 2018 |
100% Bonus Depreciation through December 31, 2018 |
$3,050,000 |
100% Bonus Depreciation: Potential Income Tax Savings based on 40% marginal tax bracket |
$1,220,000 |
* MACRS depreciation percentages are used and the taxpayer qualifies for 100% bonus depreciation.
* 100% Bonus Depreciation applies in 2018 on New & Used Aircraft.
By completing the acquisition and placing the aircraft in service by December 31, 2018, a taxpayer will capitalize on depreciation deductions by owning the aircraft for only a few months.
An often-neglected factor is that the short tax year in 2018 will allow taxpayers to maintain 100% business use with some proper planning and therefore, maximize the amount of tax benefits available. IRS regulations on personal use of a business aircraft make it very difficult to achieve 100% business use for most taxpayers during the course of a full tax year.
Act Now!
100% Bonus Depreciation is available in 2018
for New Aircraft Purchases.
Now is the time to buy a NEW/USED Aircraft for 2018 and receive a 100% Bonus Depreciation.
Depending on the value of the aircraft, your purchase might also be able to take advantage of up to $1,000,000 Section 179 Deduction. You could generate tremendous income tax savings by purchasing your new business use Aircraft and placing in service before December 31, 2018.
Purchasing a pre-owned aircraft in 2018
If a new aircraft is not for you, you can still take advantage of Bonus Depreciation on Pre-Owned Aircraft! The Tax Cut and Jobs Act (TCJA) now applies 100% Bonus Deprecation to both New & Used aircraft. In addition, Section 179 maximum deduction has increased to $1,000,000 for 2018, consider the following scenario.
Identify and purchase a pre-owned aircraft before December 31, place the aircraft in service and take advantage of the 100% Bonus Depreciation or $1,000,000 Section 179 expensing in 2018. Pick one below, we've got a great selection.
How to Take Advantage of These Tax Incentives
In order to take advantage of the above tax benefits for the current tax year, you have to take physical delivery of the aircraft and place the aircraft in service before December 31, 2018. Therefore, contact your sales representative immediately to see if any aircraft is available for delivery before year end. The aircraft has to be available to fly in its intended condition in order for you to begin depreciating the aircraft in 2018.
Don't wait!
If you require financing for your aircraft acquisition, this may be the last month to get qualified and be able to close before year end. Consider utilizing aviation finance companies who are familiar with financing aircraft and who can expedite the closing process. While you may have an excellent relationship with your local banker, being unfamiliar with financing aircraft can create costly delays to the process.
Contact your aircraft insurance broker. The aviation insurance market place is different than auto or health insurance. You cannot go online and perform a price comparison, for example. You need to identify an insurance broker whom you trust and the broker will essentially does the shopping for you.
Last but not least, you need to finalize your ownership structure. Legal, income tax, sales or use tax, and FAA regulations will all need to be examined prior to setting up the ownership entity.
BE READY! CALL TODAY!
Tax information provided by ATC Aviation Tax Consultants, LLC, 812-342-9589. Cutter Aviation is not a tax consulting firm. For professional tax advise, you should consult with your accounting firm. |
