H.R. 598 Includes Bonus Depreciation, Increase To Section 179
Expensing Return
Want some good economic news for a change? Aviation Tax
Consultants, which helps aircraft owners navigate the taxation
travails inherent to such a large purchase, tells ANN that House
Resolution 598 -- the "American Recovery and Reinvestment Tax Act
of 2009," better known as the stimulus bill -- contains a number of
provisions that will impact general aviation in a positive
manner.
Like we said, it's a welcome change of pace.
According to the firm, the Act includes the return of 50 percent
bonus depreciation for new aircraft purchases, retroactive to
January 1, 2009. Qualified aircraft for bonus depreciation include
factory new aircraft, manufactured in 2009 or prior years. Prior
model year aircraft can qualify if it has been used only as a
demonstrator aircraft by the manufacturer or dealer, and never
titled to a taxpayer.
"We do expect similar language that will allow bonus
depreciation for aircraft orders placed in 2009 and delivery
occurring in 2010," ATC notes.
Section 179 Expensing allows a small business taxpayer to deduct
up to $250,000 of capital improvement for the year of acquisition,
in lieu of recovering these costs over time through depreciation.
This incentive is subject to a phase-out once capital expenditures
exceed $800,000. Taxable income limitation is applied both at the
corporate and individual level in order to take advantage of this
expensing provision.
Another provision in the stimulus
package is the election to carryback current year net operating
loss (NOL) for three to five years. Current law allows carryback of
loss for only two years. This provision will have limited utility
to most taxpayers as you can take advantage of this provision if
your current year business or individual income tax returns create
a significant net operating loss.
For owners who took advantage of extended delivery provisions
for bonus depreciation in 2008, when you take delivery of your new
aircraft in 2009, fifty percent bonus depreciation will be taken on
your 2009 income tax return. If the depreciation creates a net
operating loss on your 2009 income tax return, you will have the
option to carry the loss back up to five tax years and receive
income tax refunds from prior years.
The House of Representatives passed its stimulus bill Wednesday
evening. The bill now faces debate and a vote in the Senate.