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 House of Representatives approved the American Jobs Creation Act of 2004 (H.R.4520) on June 17, paving the way for a one-year extension of the time allotted to place into service business aircraft purchased under the accelerated-depreciation tax bonus.
Personal use of corporate aircraft is coming under increasing attack by Congress.
A bill has been submitted in the House of Representatives that seeks to restrict a company’s ability to deduct certain portions of a flight conducted for personal use.
Titled the Corporate Jet Tax Shelter Reform Act of 2004, H.R.4352 was referred to the House Ways and Means Committee for further action.
Although the accelerated-depreciation bonus has been credited with a pickup in orders for new business jets, the General Aviation Manufacturers Association is encountering rough going in the Senate over its efforts to get the tax break extended.
While 2003 general aviation shipping and billing numbers are hardly cause for celebration, the CEOs of GA manufacturers are generally upbeat and optimistic that a turnaround has been reached. And even though 2003 was a “challenging year,” it still ranks as the fifth best year for billings in GA’s history.
With so many choices available to companies and individuals contemplating alternatives to airline travel, what’s a business owner or prospective flight department manager to do? Speakers at the fourth annual Conklin & de Decker Aircraft Acquisition Planning Seminar, held recently in Scottsdale, Ariz., sought to provide some answers to those questions.
The General Aviation Manufacturers Association has launched a campaign to extend the accelerated-depreciation schedule on new capital equipment–including business aircraft–which it calls a “defining factor” in $2 billion in jet sales. GAMA also wants to increase the period of time between the aircraft purchase date and when it has to be placed in service to qualify for the added tax incentive.
The IRS has issued temporary guidelines on the bonus depreciation option.
Edelstenne also said Falcon deliveries will reachbetween 50 and 55 this year. Although he said economic conditions have improved “measurably” since last year, this figure is short of the 63 Falcons delivered last year. He cited two reasons for the lower delivery projection. “The first was that we received orders for just 40 Falcons in 2003,” although the company delivered 49 that year.
The 2004 American Jobs Creation Act could have entirely the opposite effect on business aviation due to an “overreaching” IRS interpretation that’s causing many companies to reconsider their corporate aircraft use.