End of Year Planning and the "Bonus Eligible Aircraft"

By: Stewart Lapayowker

Business Aviation

We are expecting a sizable year-end push to complete aircraft transactions. It is important for prospective buyers and sellers to plan ahead for these desired purchases. In addition to the time required for purchase agreement negotiations, the parties must consider other factors that may affect the timeline of the purchase.

Inspection facilities – only have a limited number of slots available for inspection and the parties (typically the purchaser) will be forced to pay for overtime to ensure the timely completion of the inspection.

Loan Negotiations – Depending upon the complexity of the loan, negotiations may take several days, accompanied with multiple drafts, to finalize.  Backup documentation required by the lender may also slow the process.

Team availability – Try to give your transaction team as much notice as possible of when a transaction will occur. Even a brief “I have something cooking for a December close” message will alert your team so that personnel and resources can be allocated to timely address your needs.

A Note on Bonus Depreciation

We also are expecting an increased interest in bonus depreciation. Aircraft purchasers should be wary of advertisements that claim certain aircraft are eligible for bonus depreciation. A complex analysis is required to determine whether or not an aircraft is “new” especially if the aircraft has already been delivered to the first purchaser, who claims to be a “dealer” and also claims to have not placed the aircraft in service. A serious aircraft purchaser seeking confirmation that an aircraft is eligible for bonus depreciation should engage an experienced tax professional to review the facts and circumstances of the aircraft purchase.