Private Jet Source Bing.com
The final tax plan that was approved by the U.S. Congress in 2017 has a number of provisions that impact private jet owners and operators. Some of the changes are welcomed by the industry, while others are causing concern among those who rely on private aviation for business and personal travel.
Changes to Depreciation Rules
Depreciation Rules Source Bing.com
One of the most significant changes in the new tax law is the modification of depreciation rules for businesses. Under the old law, aircraft owners were allowed to depreciate the value of their aircraft over a period of five years. The new law extends this period to seven years, which means that owners will be able to take larger deductions over a longer period of time.
However, the new law also eliminates bonus depreciation for used aircraft, which could make it more difficult for some operators to justify purchasing pre-owned planes.
Changes to Entertainment Deductions
Entertainment Deductions Source Bing.com
The new tax plan also eliminates entertainment deductions for businesses, which includes deductions for things like sporting events, concerts, and other forms of entertainment. This change could impact the private aviation industry, as many companies use private jets to transport executives to sporting events and other entertainment venues.
However, there is some debate over how this provision will be implemented. Some experts believe that companies will still be able to deduct the cost of business-related entertainment, while others believe that the provision will be strictly enforced.
Changes to Pass-Through Entities
Pass-Through Entities Source Bing.com
The new tax law also includes a provision that allows pass-through entities, such as partnerships and S corporations, to deduct up to 20% of their income from qualified business activities. This provision could benefit the private aviation industry, as many private jet owners and operators are structured as pass-through entities.
Changes to Like-Kind Exchanges
Like-Kind Exchanges Source Bing.com
The new tax plan also eliminates like-kind exchanges for personal property, which means that aircraft owners will no longer be able to defer taxes on the sale of their old planes by purchasing new ones. This change could have a significant impact on the private aviation industry, as many owners rely on like-kind exchanges as a way to manage their tax liability and upgrade their fleets.
Conclusion
The final tax plan that was approved by Congress in 2017 includes a number of changes that impact the private aviation industry. Some of these changes are positive, such as the extension of depreciation rules, while others are causing concern, such as the elimination of like-kind exchanges for personal property and entertainment deductions. Private jet owners and operators should carefully review the new tax law and consult with their tax advisors to determine how these changes will impact their businesses.
