Modified Accelerated Cost-Recovery System


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The federal Modified Accelerated Cost-Recovery System (MACRS) allows businesses to recuperate the investment cost for the purchase of an aircraft designated for business or corporate use. The cost of the business aircraft is subtracted from the basis on a company’s tax return through depreciation deductions. Accelerated depreciation is the, “big lure”; the MACRS program is using to entice companies to purchase more aircraft for business use. Companies are allowed to deduct up to 75% in some cases of the purchase price of the aircraft the year the aircraft is purchased but the aircraft has to be put into service that year. The remaining cost of the aircraft will have to be deducted as depreciation from consequent tax returns. Under MACRS, business aircraft are allowed a seven-year lifespan in which to deduct the remaining value from the basis.

Do you need a skilled and proficient Aviation Attorney that understands the complexities of the Modified Accelerated Cost-Recovery System? Contact an Aviation Attorney to help you depreciate the value of your business aircraft through the Modified Accelerated Cost-Recovery System today!

The accelerated depreciation that the MACRS program affords can help your company offset business income produced in the year the aircraft is purchased by lowering your company’s tax obligation. By taking a higher deduction on the year of purchase, your company’s subsequent tax returns will depreciate the aircraft as if it was purchased for the outstanding basis value. The aircraft has to be used primarily for business or corporate use (over 50%) and it applies to new or used aircraft.

The Internal Revenue Service (IRS) does not allow deductions for entertainment use of a company or business aircraft. A company caught using a business aircraft for entertainment, amusement, or recreation purposes could lose their eligibility for accelerated depreciation under the MACRS program and could find their company’s taxes greatly affected by such an action. Business use of an aircraft includes any corporate or company related business or function. The IRS will not consider entertainment use if the aircraft is used to attend charitable events, for medical reasons, or funerary services.

To qualify for the accelerated depreciation offered by MACRS, an aircraft must satisfy these criteria:

  • The aircraft must have a recovery period of 20 years or less.
  • The original use of the aircraft must begin with the taxpayer claiming the deduction.
  • The aircraft must be acquired during 2008.
  • The aircraft must be put into service during 2008 or in 2009 under certain circumstances.
  • The 50% bonus depreciation applies only to new aircraft, new engines, avionics packages and other aircraft capital upgrades.

Business or corporate aviation is vital to the economy of the U.S. Of the more than 15,000 aircraft registered for business use in this country, about 97% are in use by government, farms, academic organizations, religious institutions, charities, foundations, and business of all sizes. Business aircraft include helicopters, jets, and small propeller planes. Most aircraft (85%) used by businesses in this country are owned by small to mid-sizes companies. Business aircraft alleviate major airport congestion because most of them use small airports.

Do you need a skilled and proficient Aviation Attorney that understands the complexities of the Modified Accelerated Cost-Recovery System? Contact an Aviation Attorney to help you depreciate the value of your business aircraft through the Modified Accelerated Cost-Recovery System today!

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