What is Section 179 for aircraft purchases?
Section 179 lets qualifying businesses expense part or all of the aircraft’s business-use cost in the year placed in service, subject to annual dollar limits and business income limitations. Listed property rules apply to aircraft and generally require >50% qualified business use.
How does bonus depreciation work for airplanes?
Bonus depreciation allows an additional first-year deduction on qualified property after Section 179 is applied. The bonus rate phases down in recent years; the calculator uses the selected purchase year’s rate to estimate the deduction.
What is the difference between MACRS and straight-line depreciation?
MACRS accelerates deductions in earlier years following IRS tables (aircraft commonly over 5 years), while straight-line spreads deductions evenly across the recovery period. Choose the method that best mirrors your situation and advisor’s guidance.
What does business use percentage mean?
Business use percentage is the share of total flight activity that qualifies as business. It drives the portion of basis eligible for depreciation and the share of operating expenses you may deduct.
Are aircraft operating costs tax-deductible?
Operating expenses like fuel, maintenance, hangar, insurance, pilot wages, and certain management fees are typically deductible to the extent of qualified business use, subject to ordinary and necessary rules.
What is depreciable basis of an aircraft?
Depreciable basis is the portion of the purchase price (plus qualifying improvements) used to compute depreciation. Many taxpayers apply business use percent to the basis for aircraft listed property; the calculator supports toggling this assumption.
Can I combine Section 179 and bonus depreciation?
Yes. Typically Section 179 is applied first (subject to limits), then bonus depreciation is calculated on the remaining basis, and regular depreciation applies to any remainder.
What happens if business use drops below 50%?
If qualified business use falls to 50% or less, Section 179 and bonus depreciation may be limited or recaptured. The calculator surfaces a warning when business use is ≤ 50% to highlight potential limitations.
What is depreciation recapture when selling the aircraft?
Recapture rules may require you to include prior depreciation as ordinary income upon sale to the extent of gain, potentially increasing tax in the year of disposition. Consult your tax advisor for specifics.
Do personal flights qualify as business use?
Personal flights generally do not qualify. Only flights that meet the qualified business use standards (e.g., travel between business locations or to meet clients) count toward the business percentage.
How does my marginal tax rate impact estimated savings?
The calculator multiplies estimated deductions by your tax rate to approximate cash tax savings. This is a simplification; actual results depend on overall income, state taxes, AMT, and other factors.
Are pilot wages and hangar fees deductible?
Yes, when ordinary and necessary for business and allocated to qualified business use. Enter them within operating costs; the tool estimates the deductible share based on your business-use percentage.
Does a leaseback change my deductions?
Leasebacks can affect income, expense allocation, and potential passive activity rules. They may still allow depreciation, but treatment can be complex. Coordinate with an aviation-savvy CPA.
What records should I keep to substantiate business use?
Maintain a contemporaneous flight log showing date, route, purpose, passengers, and hours, plus receipts for operating costs. Good records support your business-use percentage and deductions.