CARES Act and Business Aviation

Stimulus bill provision can benefit aircraft acquisition in 2020 - April 4, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress and signed into law by the President. There is a provision that can benefit taxpayers who are in position to purchase a business aircraft in 2020.

Excess Business Loss Limitation - the 2017 Tax Cuts and Jobs Act (TCJA) imposed a limitation on how much a taxpayer can deduct business losses against non-business income.  For example, if your pass through business entity (S corporation or LLC) generated a $2 million tax loss, a married filing jointly taxpayer can only deduct $500,000 of this loss against non-business income like interest, dividends and capital gains.  The remaining $1.5 million loss has to be carried forward to future tax years.

The CARES Act removes this limitation for tax years 2018, 2019 and 2020.  Therefore, if you purchase a business aircraft in 2020 and it results in a net business tax loss - this loss can be used to offset any other income on your personal income tax return.  

This provision should be part of a comprehensive review by your tax advisors on how the numerous stimulus provisions can affect your tax filing position for 2020.

by Daniel Cheung, CPA