How Do I Write Off The Depreciation Cost Of A Business Aircraft?


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Question:

A few years ago, I purchased a small aircraft for my business.  I know the laws regarding taxes and depreciation have changed recently.  How do I go about writing off depreciation on my taxes?

Answer:

Depreciation is not available for use on small aircraft used solely for personal reasons.  Depreciation is an allowance for wear and tear on fixed assets.  In the last few years, special depreciation tax laws have changed significantly for aircraft and other types of equipment purchased for use in business.  Some of them could result in writing off over three-quarters of the cost of your airplane in the year or purchase.  Aircraft owners who fly their aircraft in the course of business are entitled to depreciate the cost of the airplane on the tax return of the business.  This is especially beneficial to sole proprietorships, partners in partnerships, and shareholders of ‘S’ corporations.

The current method of computing depreciation is known as the modified accelerated cost recovery system (MACRS).  Under normal circumstances, the MACRS system allows you to take 14.29% of the cost of your airplane as an expense in the year of purchase.  Airplanes are assigned a life span of seven years.  This means that you can deduct the cost of your airplane over seven years.  You report this cost deduction on your company’s tax return as a business expense called “depreciation expense”.  This offsets income produced by your company and results in a lower tax bill.

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