The new U.S. tax law introduced 100 percent bonus depreciation for purchases of aircraft used for business purposes and extended this kind of benefit to both new and, for the first time, preowned models. But it also significantly narrowed or eliminated activities that previously qualified as business use, GKG Law president Keith Swirsky said yesterday at the NBAA Business Aircraft Finance, Registration, and Legal Conference.
According to Swirsky, aircraft expenses associated with entertainment, recreation, or amusement were previously deductible if they were “directly related [to] or associated with the active conduct of business.” But as of January 1 under the new law, all such entertainment expenses are disallowed, “regardless of whether they were related to a business goal,” he said.
Likewise, the tax law also largely disallows commuting expenses, such as when a CEO uses a company aircraft to fly between his residence and place of employment. “This applies even if the CEO has a secondary place of employment, such as an office, near the residence,” Swirsky told attendees. “There is an exemption for when this transport is necessary for ensuring the safety of the employee, but this has not really yet been defined. Also unknown is if this expense could be deducted if the value of transportation is included in the employee’s income.”