The Tax Implications of Owning a Corporate Aircraft
If your business is successful and you do a lot of business travel, you may have considered buying a corporate aircraft. Of course, there are tax and non-tax implications for aircraft ownership. Let’s look at the basic tax rules.
Business travel only
In most cases, if your company buys a plane used only for business, the company can deduct its entire cost in the year that it’s placed into service. The cases in which the aircraft is ineligible for this immediate write-off are:
- The few instances in which neither the 100% bonus depreciation rules nor the Section 179 small business expensing rules apply or
- When the taxpayer has elected out of 100% bonus depreciation and hasn’t made the election to apply Sec. 179 expensing.
In those cases, the depreciation schedule is 20% of the cost for year 1, 32% for year 2, 19.2% for year 3, 11.52% for year 4, 11.52% for year 5 and 5.76% for year 6. Note that the bonus depreciation rate is scheduled to be phased down for property placed in service after 2022.
Interestingly, these “cost recovery” rules are more favorable than the rules for business autos. The business auto rules […]