NBAA is encouraging its members to weigh in with their lawmakers on bonus depreciation, like-kind exchanges and business aircraft management fee measures as Capitol Hill negotiates a final comprehensive tax bill this week. The House and Senate versions of the tax bill address different aspects of these measures.
Both provide for 100 percent immediate expensing, or “bonus depreciation,” of business assets, but the House bill covers both new and used aircraft. The measures would apply to purchases through 2023, but the Senate has a phase-down that continues through 2027.
Like-kind exchanges for business assets would be repealed under both bills. Under like-kind exchange, taxable gains on the sale of a business asset can be deferred if that asset is exchanged for a similar asset. “The immediate expensing provision helps make up for the like-kind exchange repeal, but there is, of course, a sunset date for immediate expensing,” said Scott O’Brien, the senior director of government affairs for NBAA. “But the Senate language, which does not allow immediate expensing for preowned equipment, is a disincentive for the purchase of preowned business aircraft.”
NBAA also noted the Senate bill measure clarifies that business aircraft management service fees are not subject to the commercial airline ticket tax. The association created an electronic letter to help members contact Congress specifically on accelerated depreciation.