AMERICAN JOBS ACT COULD CHANGE DEPRECIATION SCHEDULE

By: Stewart Lapayowker

Business Aviation

AMERICAN JOBS ACT WOULD CHANGE DEPRECIATION
SCHEDULE FOR GENERAL AVIATION AIRCRAFT
The much-hyped jobs plan (American Jobs Act) by President Obama was revealed to Congress last week. While we will not debate the potential economic benefits of his plan, how he plans to pay for it is of concern to current and potential owners of general aviation aircraft. The American Jobs Act carries a price tag of over $400 billion dollars will be paid for by a combination of various tax increases, one of which is a modification of the depreciation schedule for general aviation aircraft (or if you are a politician the “corporate jet loophole”).  General aviation aircraft are currently depreciated over 5 years using the Modified Accelerated Cost Recovery System. This will be extended to 7 years consistent with the depreciation schedule of commercial aircraft (see below). This change is only expected to yield $3 billion dollars over ten (10) years!  To oppose the proposal, you can of course contact your representatives or support the efforts of the National Business Aviation Association (www.nbaa.org).

SEC. 421. GENERAL AVIATION AIRCRAFT TREATED AS 7-YEAR PROPERTY.(a) IN GENERAL. —Subparagraph (C) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to classification of certain property) is amended by striking “and” at the end of clause (iv), by redesignating clause (v) as clause (vi), and by inserting after clause (iv) the following new clause:“(v) any general aviation aircraft, and”.(b) Class life. Paragraph (3) of section 168(g) Internal Revenue Code of 1986 is amended by inserting after subparagraph (E) the following new subparagraph:“(F) General aviation aircraft. In the case of any general aviation aircraft, the recovery period used for purposes of paragraph (2) shall be 12 years.”.(c) General aviation aircraft.–Subsection (i) of section 168 Internal Revenue Code of 1986 is amended by inserting after paragraph (19) the following new paragraph:“(20) General aviation aircraft.–The term `general aviation aircraft’ means any airplane or helicopter (including airframes and engines) not used in commercial or contract carrying of passengers or freight, but which primarily engages in the carrying of passengers.”.(d) Effective date. This section shall be effective for property placed in service after December 31, 2012.