Understanding The Nuances of Aircraft Tax Planning

At this point and time, most of the individuals and private firms operating general aviation aircraft or planning to add a general aviation vessel to the business operations, will find uncertainty regarding the upcoming year. With the clearer political changes, along with face-to-face meetings and few conferences, the uncertainty maintains a cloud over the early planning of the upcoming year. So, during these time, it is vital to remember that the general aviation air vessel continues to serve a major purpose in growing and maintaining business operations during challenging times. There might be an unprecedented and new public health benefit, as mentioned in Aircraft Tax Planning. A proper planning will help assure that your business remains well positioned for a stronger year's end.

The current tax law to purchase incentives for aircrafts:

The tax reform of the Aircraft Tax Planning is one strong possibility in the upcoming years. Here, you get to witness new administration and congress. But it is vital to realize that as of January 2021, the provisions under Tax Cut and Job Acts of 2017 continue to govern the transactions placed under business aircraft category. The TCJA offer aircraft purchases made in 2021 and 2022 and those are eligible for 100% bonus depreciation. It will allow the qualified businesses to deduct around 100% of aircraft purchase price in the purchased year.

The final regulations:

As per the final regulation’s clarifications, the eligibility was issued in September 2020. While some of the newer Aircraft Tax Planning and policy might seem to minus the incentive, it is highly unlikely to be passed as the major priority, given the need for that continued stimulus. So, you get to apply for the retroactivity for purchases made before the reform passes. All these points surely made 2021 highly potential for urgent time to not just identify but also to purchase aircraft to match your business requirements.

Lack of 1031 exchange for the aircraft:

The value revolving around 100% depreciation is mainly acute for those, which are currently holding aircraft that they plan to sell or replace with another one. You must be wondering why. Whenever a business sells an aircraft that has been depreciated, it will create an ordinary income event. It is needed for recapturing the depreciation behind actual loss in the said value. Before the TCJA, 1031 exchanges might have been used for delaying the triggering of the recapture, and that provided a fact that businesses were investing in replacement aircraft closer towards the sales’ time.

More on the next count:

Later, TCJA eliminated the 1031 exchange and the providers were used to avoid depreciation to recapture business aircraft owners planning to upgrade aircraft while trying to dispose the aircraft. With the help of proper Aircraft Tax Planning, understanding the latest norm is always the main goal to consider. Asking the professional tax planners and accountants will help to address all your needs as and when asked for. Just make sure to know more about the packages and then get the best help possible. For more information visit here: Advocate Consulting Legal Group, PLLC.