Timing the purchase of a business aircraft
The most frequently asked questions lately revolve around the return of 100% bonus depreciation and “timing” the purchase of a business aircraft based on pending tax legislations. For companies that utilize a corporate aircraft for business travels in order to improve productivity and provide better work life balance for key employees – I believe delaying an acquisition because of pending tax legislation is counterproductive.
According to news reports, incoming Senate Majority Leader John Thune will prioritize border security over tax relief and extension of expiring tax provisions from the 2017 Trump tax reforms. Therefore, 100% bonus depreciation legislation may not pass until later in 2025.
Acquiring an aircraft in 2024 provides immediate tax relief, even at 60% bonus depreciation. The 40% remaining purchase price will be depreciated over the next five years for Part 91 operators. Passthrough entity owners can potentially eliminate or reduce the fourth quarter estimated individual income tax payments on January 15, 2025. Managing and limiting non-deductible entertainment use will be easily accomplished, therefore, maximizing available tax deductions in 2024.
If you have an opportunity to complete an aircraft acquisition in 2024, you may reconsider the pros and cons, both tax and non-tax considerations, and make an informed decision for your business.
