IRS To Publish Notice on Personal Use of Business Aircraft

 - April 25, 2007, 10:26 AM

On Monday (June 13), the Internal Revenue Service is scheduled to officially publish IRS Notice 2005-45, Deductions for Entertainment Use of Business Aircraft. This notice will provide revised guidance to aircraft operators on the deductible amount of business expenses for use of a corporate aircraft for "entertainment" (personal use) that were imposed by the American Jobs Creation Act of 2004. The act, signed into law in October, also contains the bonus depreciation extension for aircraft to be used in Part 91 operations. Essentially, NBAA said, the law reverses the 2001 Sutherland Lumber decision, a case that has been used extensively as a basis for tax treatment of personal flights on business aircraft. The Sutherland Lumber decision allowed the full amount of deductions for operating vacation, entertainment or recreation flights as long as the appropriate amount (SIFL) was included in the employees' income. NBAA has obtained an advance copy of IRS Notice 2005-45.