2008 Economic Stimulus Act

If you are considering the purchase of a new aircraft share, then this Act of Congress has provided you with the perfect reason to move forward.  Thanks to the 2008 Economic Stimulus Act and the recent return of Bonus Depreciation on new aircraft share purchases, there has never been a better time to purchase into the Avantair fractional program.  With the hopes of stimulating the economy, Congress is allowing a special depreciation allowance of up to an additional 50% on a property’s depreciable basis.  This allowance, coupled with our industry leading pricing and fuel efficiency, makes Avantair the smartest choice.  Talk about a Capitol idea.  The following information details the special tax benefits* available to those who purchase with Avantair before December 31st, 2008.

Special Tax Benefits Available To Avantair Purchasers
To Maximize Deductions The Taxpayer Must Place Aircraft In Service In 2008

The 2008 Economic Stimulus Package included both bonus depreciation and an enhanced expensing election available to new aircraft purchasers. Bonus depreciation is available to all new aircraft, including fractional interest, that are used primarily for business. The enhanced expensing election applies to aircraft placed in service by “qualifying small business” taxpayers. A qualifying small business is one that invests less than $1,050,000 in total equipment purchases in 2008. Bonus depreciation may be available for certain new aircraft purchased in 2008 under a binding agreement and delivered in 2009. However, the expanded expensing deductions will not apply. Here is how the provisions are impacted on a 2008 purchase of a 1/16th interest with Piaggio from Avantair.

Here is how the provisions are impacted on the 2008 purchase of a Piaggio 1/16th Share

The new law contains an ordering provision that provides that the expensing election be taken first. Bonus depreciation is calculated by computing 50% of the balance of the basis remaining after the expensing election. Regular depreciation is computed on a 5-year basis using the modified accelerated cost recovery method, generally 20% in the first year. Aircraft ownership structuring is also impacted by unique FAA rules, sales tax issues, and liability concerns which must be blended with these new tax rules. For further details see: “Qualifying for Bonus Depreciation on Aircraft”, “Qualifying for Expanded $250,000 Expensing Election”, and aircraft depreciation calculator at www.advocatetax.com.

Louis M. Meiners, Jr.
August 15, 2008
www.advocatetax.com

Louis M. Meiners, Jr. is an Indiana attorney and CPA who serves as president of Advocate Aircraft Taxation Company. Advocate’s practice is limited to serving the needs of owners and operators of aircraft. Services include aircraft operational analysis, sales and use tax management on aircraft acquisitions, income tax planning, federal excise tax planning, and representation before taxing authorities. Meiners can be reached at (888) 325-1942, or loum@advocatetax.com.

IRS Circular 230 Disclosure. New IRS rules impose requirements concerning any written federal tax advice from attorneys. To ensure compliance with those rules, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under federal tax laws, specifically including the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

This article is designed to provide information of general interest to the public and is not intended to offer specific legal advice. You should consult Advocate Aircraft Taxation Company or your tax and aviation advisor if you have a matter requiring attention.