New Aircraft May be Eligible in Stimulus Package

The National Air Transportation Association indicated that the recently signed Economic Stimulus Act of 2008 includes a special tax provision allowing for additional depreciation on eligible purchases of property which could include new aircraft acquisitions. NATA said the $150 billion economic stimulus...

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The National Air Transportation Association indicated that the recently signed Economic Stimulus Act of 2008 includes a special tax provision allowing for additional depreciation on eligible purchases of property which could include new aircraft acquisitions.
NATA said the $150 billion economic stimulus package includes enhanced "bonus depreciation" benefits to assist general aviation and other industries. For qualified purchases, this legislation provides a 50 percent depreciation bonus for the first year the property is placed in service. That would be on top of the 50 percent bonus depreciations for 2008 and 2009 for purchases and deliveries in those years. Related Story
NATA cautioned that determining eligibility is complex and advised operators who want to take advantage of the new bonus carefully review both the act’s provision authorizing the depreciation bonus and the technical explanation materials provided by Congress and consult with an attorney, tax expert or accountant as necessary.
Section 103 "Special Allowances for Certain Property Acquired During 2008," requires that the property purchase must occur after December 31, 2007, and before January 1, 2009. Furthermore, only that property for which "original use" commences on or after January 1, 2009, is eligible for the first-year depreciation bonus, said NATA in its alert to members.
“Generally, tangible property with a recovery period not exceeding 20 years, such as aircraft, would be eligible for bonus depreciation,” said NATA. “Bonus depreciation accelerates the depreciation of the asset, pushing much of the depreciation to the early years of asset ownership, which effectively reduces the company's tax liability. The accelerated depreciation would be 50 percent of the cost of the asset in 2008. Bonus depreciation applies to factory new and some demonstration aircraft only.”