Depreciation in Tax Relief Act Should Spur Business Aircraft Sales

If you are in the market for a new business aircraft, the time to buy could be now...and next year. This is, of course, if you are looking to depreciate this big capital purchase quickly. The reason is the bipartisan Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which became law on December 17 after being signed by President Obama.

As explained to BJT by NBAA v-p Mike Nichols, the Act includes "100-percent expensing" of investments in capital assets, such as business aircraft, purchased between September 8 this year and December 31 next year. However, "this expensing [is] more like the current bonus depreciation," he said, and therefore applies to only new aircraft. Another provision extends the current 50-percent bonus depreciation to the end of 2012. The White House hopes the expensing provision will result in $50 billion in new investments and will thus help fuel job creation.

David Wyndham, v-p of Conklin & de Decker, said the Tax Relief Act "adds a significant accelerator to buyers' decisions. Companies looking at new aircraft will be more inclined to purchase sooner. Accelerating deliveries will prompt the recall of numerous people who were laid off in aviation manufacturing." Another provision calls for extension to the research and development tax credit, which should encourage technical advances.