Territorial Limitations - Aviation Insurance & Risk Management ...

Section 179 Treatment
AIRCRAFT TAX PLANNING
In addition to the accelerated depreciation methods, Section 179 of the tax code also allows the taxpayer to take an immediate
deduction of a portion of the purchase price (up to $105,000 in 2005). The maximum deduction is adjusted each year for
infl ation. Section 179 treatment is subject to certain limitations. The available Section 179 deduction for a given tax year is
reduced by one dollar for each dollar in excess of $420,000 of qualifi ed property placed in service by the taxpayer during that
year. The phase-out amount is also indexed each year for infl ation. The Section 179 deduction is further limited to the amount
of the taxpayer’s taxable income from the active conduct of any trade or business, without regard to net operating losses or
the deduction for one-half of self-employment taxes.
Bonus Depreciation
From 2001 through 2004, the tax code allowed a bonus amount of additional depreciation to be taken in the year that a new
aircraft was purchased and placed in service. The bonus depreciation provisions were scheduled to expire at the end of
2004, but were extended by the American Jobs Creation Act of 2004. Purchasers of qualifying internal-use corporate aircraft,
acquired before the end of 2004, had until the end of 2005 to place the aircraft in service and claim the bonus depreciation.
Currently, it appears unlikely that Congress will renew these bonus depreciation provisions.