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.
Taxation in the United States
While general aviation interests hailed the tax law that extended the deadline for the 50-percent accelerated bonus-depreciation allowance for business aircraft, the law also contains a provision that severely limits expenses that a company may deduct when employees use an employer-provided aircraft for personal travel.
The Internal Revenue Service recently published Revenue Procedure 2003-85, which provides inflation-adjusted items for 2004. Section 3.27 specifies the rates for 2004 for the domestic segment fee and the international arrival/departure tax, applicable for commercial air transportation.
Michigan Gov. Jennifer Granholm recently signed legislation that exempts the sales tax on aircraft parts installations performed in the state for customers who do not reside or base their aircraft in Michigan. The new law also provides a waiver from taxes associated with purchasing an aircraft in Michigan by buyers who do not live or keep their aircraft in the state.
New York’s state Senate last week passed legislation (S.3655) sponsored by Sen. Bill Larkin (R-39th District) to provide a sales and use tax exemption on general aviation airplanes to be operated under Part 91 and purchased in the state. The exemption, if passed by the state Assembly and signed by the governor, would take effect on December 1.
Air-taxi operators might be interested in checking out the DOT’s revised list of airfields that are designated “rural airports” for the purposes of the segment fee portion of federal excise taxes. Air-taxi and other commercial operators are not required to collect segment fees on flights to or from rural airports.
At press time, the Internal Revenue Service had yet to officially publish IRS Notice 2005-45, Deductions for Entertainment Use of Business Aircraft. This notice is intended to provide aircraft operators guidance on revised rules for computing the deductible amount of expenses for personal use of a corporate aircraft.
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.
Conklin & de Decker part owner Nel Sanders-Stubbs, for years the NBAA’s prime source of tax knowledge and expertise, gave Conklin & de Decker aircraft acquisition planning seminar attendees some insights on what to expect in the way of federal passenger excise taxes as well as state sales, use and registration levies.
A plan implemented last year to offset the city and county tax burden on airplane owners at Pitt-Greenville (N.C.) Airport has attracted more aircraft owners to the airport. The Greenville City Council and Pitt County Board of Commissioners each unanimously voted to continue funding this year for a stimulus plan that provides about $150,000 in credits to aircraft owners. The two governments will split the cost equally.