NBAA has asked the IRS for guidance on provisions in the Tax Cuts and Jobs Act affecting business aviation, including measures providing 100 percent bonus depreciation and the disallowance of certain entertainment and commuting expenses deductions. The association backed the extension of 100 percent bonus depreciation to used property, in addition to new, as part of tax reform.
The law essentially requires the property, whether new or used, must be new to the taxpayer claiming depreciation. NBAA is hoping to ensure that incidental use by the taxpayer of used property does not disqualify it from bonus depreciation.
“For example, there are situations where a taxpayer could charter or conduct a demonstration flight on a business aircraft that it later acquires,” NBAA said. “For these types of flights, the taxpayer would not be the operator of the aircraft, so the aircraft should not be viewed as having been ‘used’ by the taxpayer for purposes of the original-use requirement.”
NBAA further queried about guidance on issues surrounding effective dates and self-constructed property. As for business entertainment expenses, NBAA asked the IRS to clarify how trips are treated when there is a combination of activities. For the commuting expense disallowance, NBAA encouraged the IRS to look at specific marginal costs of providing commuting benefits since business flights often include travelers with different destinations and purposes.