A one-year extension of the accelerated bonus depreciation for general aviation aircraft purchases was included in S.1637, the Jumpstart Our Business Strength (Jobs) Act, which the Senate passed by an overwhelming 92-5 vote last month. The next step is for the House of Representatives to pass similar legislation.
Taxation in the United States
Pushed by President Bush for legislation intended to stimulate the nation’s economy, Congress has taken action on two bills that may affect the purchase of new aircraft by boosting depreciation deductions. While the bills use the term “qualified property” as eligible for depreciation deductions, new aircraft could possibly fit that definition.
With Congress out of town for its “summer district work period,” there was little action on the FAA’s reauthorization bill, and the nagging question of how to fund the agency for the next four years hung over the legislature as the September 30 deadline loomed.
Lawmakers departed early last month for a 25-day hiatus, but the rhetoric between the nation’s airlines and general aviation over user fees continued apace.
As of July 1, the state of Indiana can no longer impose a use tax on the value of aircraft temporarily located in the state for refurbishment, maintenance and overhauls.
The tax committee of the NBAA will host two events in conjunction with its 57th annual meeting and convention in Las Vegas in October. The NBAA 13th Annual Tax, Regulatory & Risk Management Conference (previously known as the NBAA Tax Conference) is scheduled for October 10 and 11 at the Las Vegas Hilton.
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.
A provision in the legislation to reauthorize the nation’s surface transportation programs, known as the Highway Bill, would “drastically alter the way the taxes on jet fuel are collected,” according to the National Air Transportation Association. Under the proposal, jet fuel would be taxed at the same 24.4-cent-per-gallon rate as diesel fuel.
Companies that allow executives or their families and guests to fly on their aircraft for certain personal reasons will most likely be adversely affected by IRS Notice 2005-45’s deduction limitations.
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.