Under a provision of President Bush’s economic stimulus package, purchasers of new aircraft can take a first-year depreciation deduction of 30 percent for the taxable year in which it is placed in service. H.R.3090, “The Job Creation and Worker Assistance Bill of 2002,” included a 30-percent bonus depreciation provision on the value of certain capital assets for 36 months. Useful lives will remain at five years for Part 91 operators and seven years for Part 135 operators. “The basic question that has been coming in is, ‘Is it on just new or also on used aircraft?’” said Greg Jackson, manager of tax issues for NBAA. “It is just for new aircraft. Think of it as the old investment tax credit.”
The purpose of the legislation, which was passed by the House of Representatives on March 7 and the Senate on March 8, is to generate capital spending, he said. “It’s a fairly good deal,” Jackson said. He explained that in the case of a $1 million asset, the owner takes 30 percent off the top–$300,000. Thus, depreciation would begin at $700,000.” According to Advocate Aircraft Taxation Co., depreciation for the year of acquisition and subsequent years would be in addition to the 30-percent bonus depreciation, and would be based on the remaining 70 percent of costs.
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