Small Municipal Airport Runway

CARES Act and Business Aviation

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.

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