On Tuesday, January 16th, 2024 top lawmakers on the Senate and House tax writing committees announced a deal on a wide range of tax issues, including several business deductions facing possible phase down or sunset. Significant to the business aviation industry, the Act specifically extends 100% bonus depreciation.
The legislation, dubbed the Tax Relief for American Families and Workers Act of 2024, extends 100% bonus depreciation for eligible qualified property for qualified property placed in service after December 31, 2022, and before January 1, 2026 (January 1, 2027, for longer production period property and certain aircraft [1].) This change may directly impact 2023 filings, removing the 20% phase-down in the current law [2].
Taking bonus depreciation for a general aviation aircraft requires that the aircraft be used predominately in furtherance of the business activity, be placed in service in the tax year at issue, and that appropriate listed property books and records be maintained. Business form and type, ownership structure, and the nature of the business use may all impact bonus eligibility [3].
While passage remains uncertain, prominent Party leaders from both parties have publicly endorsed the agreement. They face a tight deadline to implement any changes to the tax code with the 2023 tax filing season beginning on Jan. 29.
This article was originally published by NAFA member, Suzanne Meiners-Levy, Partner, at Advocate Consulting Legal Group, PLLC, on January 18, 2024.
