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100% Bonus Depreciation Extension is An Essential Piece of the New 2024 Tax Deal Proposed by Senate and House Tax Committees

By Suzanne Meiners-Levy

On Tuesday, January 16th, 2024 top lawmakers on the Senate and House tax writing committees announced a deal on a wide range of tax issues, including several business deductions facing possible phase down or sunset. Significant to the business aviation industry, the Act specifically extends 100% bonus depreciation.

The legislation, dubbed the Tax Relief for American Families and Workers Act of 2024, extends 100% bonus depreciation for eligible qualified property for qualified property placed in service after December 31, 2022, and before January 1, 2026 (January 1, 2027, for longer production period property and certain aircraft[1].) This change may directly impact 2023 filings, removing the 20% phase-down in the current law[2].

Taking bonus depreciation for a general aviation aircraft requires that the aircraft be used predominately in furtherance of the business activity, be placed in service in the tax year at issue, and that appropriate listed property books and records be maintained. Business form and type, ownership structure, and the nature of the business use may all impact bonus eligibility[3].

While passage remains uncertain, prominent Party leaders from both parties have publicly endorsed the agreement. They face a tight deadline to implement any changes to the tax code with the 2023 tax filing season beginning on Jan. 29.

Senate Majority Leader Chuck Schumer, D-N.Y., embraced the deal Tuesday afternoon in a speech on the Senate floor.

“I support this bipartisan tax framework because it makes important progress to expand the child tax credit, helps address our affordable housing crisis and helps keep U.S. businesses competitive against the Chinese Communist Party,” Schumer said. “As everyone knows it takes bipartisan support to get things done so I hope our Republican Senate colleagues are willing to work with us to keep this process going.”

Sen. Mike Crapo, R-Idaho, the top Republican on the finance committee, called the bill a “thoughtful starting point” in a statement released Tuesday. Crapo said he was committed to working on the issue and did not endorse the plan.

“With the tax filing season approaching, there is a short timeline to advance tax legislation that can pass both the House and Senate,” Crapo said in a statement. “I will continue working with my Senate colleagues to build broad, bipartisan support for a tax package that provides appropriate relief for working families and businesses.”

Business Roundtable CEO Joshua Bolten explained, “Reviving immediate research and development expensing, full expensing for purchases of equipment, machinery and technology, and a more sensible business interest deduction would increase domestic investment, bolster U.S. innovation and create American jobs.”

This article provides an introduction to a complex, and often ambiguous, area of law. Knowledgeable people may disagree as to outcomes in particular cases. Always consult with your advisor.

[1]  26 U.S.C. § 168(k)(2)(C).
[2] 26 U.S.C. § 168(k)(2)(A)(i)
[3] Tax laws surrounding business aviation are complex and often seem contradictory. The TCJA further complicated the tax landscape by treating different types of businesses vastly differently in surprising, and sometimes contradictory ways. For this reason, it is important to understand the need to seek individualized advice and assistance not only at the moment of purchase or purchase planning but throughout the duration of the equipment utilization.

Suzanne Meiners-Levy is a Partner and the Pro Bono Coordinator at Advocate Consulting Legal Group, PLLC (ACLG). ACLG is a boutique legal practice consisting of a team of tax and legal professionals, whose primary focus is to provide turnkey Aviation “TLC”, or assistance with Tax, Legal, and Compliance matters for general aviation aircraft owners and operators. Suzanne has worked on hundreds of aircraft transactions on behalf of aircraft owners and operators, successfully represented clients in local, state, and federal audits, and has been certified as an aircraft leasing expert witness in both state and federal courts. She is a member of the Bar in Florida, Texas, Tennessee, New York, and the United States Tax Court. She is a sought-after public speaker on tax matters, presenting at a range of aviation professional events, and authors quarterly tax columns for several aviation publications, Suzanne graduated summa cum laude from Vanderbilt University and magna cum laude and Order of the Coif from NYU School of Law. She currently serves on the Board of Directors of and Executive Committee of Juvenile Law Center and is a Program Director and Team Coach for Odyssey of the Mind.

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