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Blog for February 23- 2011

Tax-Day Bonus

If you purchased a new aircraft in the last quarter of 2010—or new equipment- avionics or refurbishments for one already in your fleet—you just might be your accountant or CFO’s new best friend. With tax season fast approaching- our trusted number-crunchers are always looking for ways to save us money. And this is a good one!

In an unprecedented tax move- United States legislators have increased “bonus depreciation” and Section 179 expensing to 100 percent for purchases made September 9- 2010 through December 31- 2011. They also have extended the 50 percent depreciation that was set to expire last year until the end of 2012. There are several applicable limitations- which any aviation tax specialist can help define.

At a high level- these include the following requirements- according to several fellow National Business Aviation Association (NBAA) members- Jed Wolcott and Ed Kammerer. (1) The taxpayer must be the first owner of record. (2) The aircraft must be placed in service after September 8- 2010 through December 31- 2011. (3) The asset’s predominant use must be in the United States and for business purposes. (4) There must have been no written binding contract in effect prior to January 1- 2008- but the definition of this may not be what you expect- so don’t rule it out!

As you can imagine- this legislation has piqued the interest of some potential buyers and shows signs of giving a much-needed shot in the arm to aircraft sales markets. Perhaps soon “white tails” will be a distant memory and the healthy sales activity we have all been missing will return!

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