In the years following the Tax Cuts and Jobs Act of 2017 (TCJA), bonus depreciation has undergone many shifts, extensions, and planned end dates. This time around, bonus depreciation is facing a phasedown rather than an immediate expiration. With businesses continuing to invest, this particular incentive will remain in place until January 1st, 2023 when it gradually decreases over a 3-year period according to the TCJA’s plan. Understanding these changes is critical for businesses managing their finances; all those affected by the phasing-down of bonus depreciation must be aware of their options in order to make informed financial decisions with confidence.

The purchase of an aircraft is a big decision, and it’s important to take into consideration more than just the ability to use bonus depreciation. Depending on how the aircraft will be used, as well as the current tax situation of the buyer, there are certain additional eligibility criteria that must be met in order for them to take advantage of this option. Furthermore, having a planned out ownership and operating structure is essential for any purchase. With these elements in place ahead of time, both before and after closing, buyers can be confident that their purchase adheres to all relevant federal and state-level regulations.

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As we wrap up the year and head toward 2023, bonus depreciation is entering a new phase.