Tax Issues for Airplane Purchases: Planning Strategies, Complexities Under Current Tax Law

The purchase and ownership of business aircraft come with significant federal, state, and local tax implications and offer opportunities for optimum tax benefits with careful planning. Tax attorneys and advisers must recognize the impact of key tax provisions on business airplane purchases and ownership and implement tax planning techniques to ensure the best results for taxpayers.

The bonus depreciation rules allow an immediate deduction of up to 100 percent of the purchase price of a new or used airplane. However, taxpayers no longer receive income tax deferral benefits from like-kind exchanges of aircraft. Also, business entertainment use of an aircraft is no longer deductible, which could potentially diminish the business value of owning an airplane. Current owners or potential buyers of business use airplanes, and their tax counsel, must wade through the numerous complexities under current tax law to determine their impact on business ownership of an aircraft.

In addition, tax counsel and owners must consider the hobby loss rules, personal use calculations, and federal excise taxes, along with many other federal tax issues.

Listen as our panel of experts discusses the tax considerations of owning an airplane. The panel will offer strategies for minimizing upfront state and excise taxes and ongoing concerns, including imputing personal use and avoiding classification as a hobby loss.

1. Tax treatment of aircraft ownership under current tax law
2. Key planning techniques to maximize tax benefits
3. Application of the federal fuel and air transportation excise taxes

The panel will review these and other key issues:

• What are the key considerations in structuring an aircraft purchase?
• What are the most effective methods for calculating travel, meals, and entertainment deductions?
• What are the hobby loss rules and traps to avoid?

Learning Objectives

After completing this course, you will be able to:

• Identify key tax provisions that impact aircraft purchases and other business, entertainment, and travel expenses
• Establish the depreciation rules that govern aircraft purchases, the dates required to utilize these rules, and the phase-out periods
• Recognize the changes to business entertainment deductions, which could diminish the business value of owning aircraft
• Ascertain whether the costs of flights are deductible
• Determine the extent to which state sales and income taxes impact the business owner of an aircraft

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of pass-through taxation, including taxation of partnerships, S corporations and sole proprietorships, qualified business income, net operating losses and loss limitations; familiarity with net operating loss carry-backs, carry-forwards and carried interests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).