Bonus Depreciation To Be Extended Through 2015?

by Scott Horton on April 7, 2014

On April 3, 2014, the Senate Finance Committee marked up a bill that would extend 50% Bonus Depreciation and the 2013 Section 179 expensing limits through 2015. Bonus Depreciation allows the purchaser of a new aircraft to deduct, as a bonus, an additional 50% of the purchase price in the year the aircraft is placed in service. The Section 179 election applies to the purchase of new or used aircraft and allows the purchaser, subject to various limitations, to deduct up to $500,000 of the purchase price of an aircraft in the first year. Stay tuned for further updates…

 

 

2013 UPDATE ON 50% BONUS DEPRECIATION AND SECTION 179

by Scott Horton on January 1, 2013

TAX INCENTIVES FOR AIRCRAFT PURCHASES INCREASED AND EXTENDED THROUGH 2013

50% BONUS DEPRECIATION EXTENDED THROUGH 2013.

As part of the deal to avert the “fiscal cliff”, Congress extended bonus depreciation through 2013 for business aircraft acquired and placed in service in 2013, and through 2014 for “certain aircraft” placed in service in 2014 when contracts are signed in 2013.

SECTION 179 ELECTION INCREASED FOR 2012 AND EXTENDED THROUGH 2013.

The Section 179 dollar limitation was increased to $500,000 for 2012 and 2013 and will phase out dollar for dollar for property with a cost exceeding $2,000,000. Previously, the 2012 limit was $139,000 to be phased out at $560,000. The 2013 limit was $25,000 to be phased out at $200,000.

Section 179 allows taxpayers to expense (rather than capitalize and depreciate) the cost of a business aircraft. Importantly, this election applies to both new and used property and can be taken in addition to bonus depreciation on new aircraft.

 

EXAMPLES:

2013 PURCHASE OF NEW BUSINESS AIRCRAFT

Purchase Price $2,000,000

Section 179 Expense 500,000

50% Bonus 750,000

MACRS Depreciation 150,000

Total 2013 Deduction $1,400,000 (70% of purchase price)

 

2013 PURCHASE OF USED BUSINESS AIRCRAFT

Purchase Price $2,000,000

Section 179 Expense 500,000

MACRS Depreciation 300,000

Total 2013 Deduction $800,000 (40% of purchase price)

 

Important qualifications and limitations apply. If you purchased an aircraft in 2012, or plan to in 2013, contact me to determine how you may benefit from Section 179 or bonus depreciation.