Unless Congress votes for an extension, 100% Bonus Depreciation* tax incentives currently available for new aircraft purchased for business purposes in 2011, will end December 31st. These significant incentives may provide up to 100% depreciation in the first year of service for qualified aircraft purchases. In 2012, Bonus Depreciation is slated to drop to 50% -- however certain circumstances will also allow for 100% depreciation on 2012 tax returns if you act now.
- 100% depreciation for qualified assets purchased and placed in service in 2011
- 50% depreciation for qualified assets purchased and placed in service in 2012
But 100% depreciation is also available for 2012 aircraft purchases when the following criteria are met:
- A binding contract to purchase is signed by December 31, 2011 - with delivery in 2012
- A non-refundable deposit of the lesser of 10% cost, or $100,000 is made by December 31, 2011
- The purchased aircraft has an estimated production period exceeding 4 months
- The cost of the purchased aircraft exceeds $200,000
- The delivered aircraft is placed in Part 91 operation by December 31, 2012
- Depreciation is taken on the 2012 income tax return
Why is 100% Bonus Depreciation Valuable?
- While Bonus Depreciation does not affect total allowable depreciation over the life of the aircraft (cost of acquisition), it allows for a dramatic tax benefit in the year the aircraft is acquired by allowing for immediate 100% depreciation, rather than depreciation over a 5 or 7 year period.
- In some cases, Bonus Depreciation can effectively create a net operating loss to be carried back to previous years and actually result in a tax refund
- If your tax liability is large for 2011, the impact of 100% depreciation can be dramatic
All Piper aircraft, including the newly updated high-performance 2012 M-Class line (Meridian, Mirage and Matrix aircraft) are eligible for bonus depreciation for firm orders placed by the end of this month. For any questions regarding aircraft sales, please contact Keith Douglass or Ann Pollard at 781-834-4928.
*Please Note: Every individual and business is different. Consulting with a qualified tax professional is essential to understanding your particular tax circumstances - and how these incentives may benefit your 2011 or 2012 tax outcome.