According to Cessna Aircraft, enhancements made to business aircraft this year might qualify for the new bonus depreciation tucked into the recently passed federal stimulus legislation, depending on the tax accounting treatment.
Generally Accepted Accounting Principles
For business aviation, the latest $787 billion economic stimulus bill–H.R.1, the “American Recovery and Reinvestment Act”–giveth with one hand and taketh away with the other.
Sparta, N.J.-based business aviation consultancy Brian Foley Associates today said it believes the recovery of the business jet market will be sooner than previous estimates, despite “being nowhere near the bottom” of the current market cycle. “It’s hard to think recovery in this environment, but there’s reason to believe that we may come out of this a little sooner than widely expected,” noted company president Brian Foley.
A new federal tax-cut law contains an increase in the bonus depreciation percentage from 30 percent to 50 percent in the first-year allowance for the purchase of capital goods, including new aircraft. The rate will be available for any new aircraft–regardless of value if used under Part 91–acquired after May 5, 2003, and before Jan. 1, 2005. The aircraft must be placed in service before Jan. 1, 2006.
Sentient Jet Holdings, parent of Sentient Flight Group, today revealed that its financial backers have agreed to provide a new supply of funding to help the charter, aircraft management and jet card firm continue growing and address a cash-flow problem that has resulted in delayed payments to vendors. Sentient also revealed that Gregory Campbell, Sentient’s chairman of the board of managers, is assuming the role of CEO.
Under a provision of President Bush’s economic stimulus package, purchasers of new aircraft can take a first-year depreciation deduction of 30 percent for the taxable year in which it is placed in service. H.R.3090, “The Job Creation and Worker Assistance Bill of 2002,” included a 30-percent bonus depreciation provision on the value of certain capital assets for 36 months.
Many business gurus believe knowledge is power, but the ability to transform that wisdom into action is the real measure of success. With just that goal in mind, 17 general aviation business leaders–CEOs, presidents, CFOs and operations managers–gathered at Northwestern University’s Transportation Center recently for the Strategic Management for Aviation Service Firms conference.
The acquisition costs of the three diagnostic systems assessed above vary markedly, but what is the annual cost of ownership to operators? To calculate this, AIN assumed a three-year amortization of the purchase price for the VitalLink and Tempus systems (EMS-Link is leased).
President Bush signed an economic stimulus plan on February 13 that extends bonus depreciation for new aircraft purchased and placed in service through next year. The legislation makes it possible for purchasers who plan to use their aircraft primarily for trade or business purposes, and thereby qualify for MACRS accelerated depreciation, to write off 50 percent of the purchase price during the first year of ownership.
The $168 billion economic stimulus plan President Bush signed yesterday includes a provision that alters section 168(k) of the Internal Revenue Code to allow buyers of factory-new aircraft to take the bonus depreciation for aircraft that will be used more than 50 percent of the time for business purposes and are placed in service this year and, in many cases, next year. Minimum value of aircraft that fall into section 168(k) is $200,000.