The new GOP tax bill, that was signed into law last Friday, is the topic of national conversation this week. The $1.5 trillion tax plan represents the most sweeping and substantial change to the tax code in more than three decades.
Overshadowing Sunday's late-night visit from Santa Claus, the new GOP tax bill that President Trump signed into law last Friday is the topic of national conversation this week. The $1.5 trillion tax plan represents the most sweeping and substantial change to the tax code in more than three decades.
Those applauding the bill's passage had a very merry Christmas indeed, while those opposing the legislation may still be nursing their holiday eggnog. But if opponents and supporters share one thing, it's considerable confusion at this early stage over what the legislation means for individuals, families, businesses, and our country more broadly.
While the practical impacts of the new plan will shake out over the coming months (and years), there are important implications for current and future private aircraft owners. The SOLJETS' team has been busy these last few weeks answering client questions on how the new tax plan could affect existing aviation assets and anticipated acquisitions in the coming year.
Of particular interest, the new legislation repealed like-kind exchanges under Section 1031 of the Internal Revenue Code. As a result, it will no longer be possible to defer taxes by reinvesting sales from an aircraft into a replacement aircraft. "It's unfortunate—many of our customers rely on these exchanges to support the purchase of another jet," said SOLJETS' Co-Founder and Partner Matt Stringfellow. "We lobbied hard alongside other aviation industry leaders but were ultimately unsuccessful in countering the repeal."
In a notable offset to this provision, however, the tax bill allows for immediate expensing of new and used aircraft. "Allowing buyers to depreciate 100 percent of the aircraft cost immediately," explained SOLJETS' Co-founder David Lee, "gives owners and their businesses much-needed tax relief and provides interested buyers with financial incentives to invest in new assets." Furthermore, adds Lee, "the inclusion of used assets in the final version of this legislation is a huge win for jet owners and the broader aviation industry, since pre-owned assets are a significant share of the private aircraft market."
The new legislation also explicitly exempts private aircraft management from airline ticket taxes. This provision codifies existing practices and provides both jet owners and management companies with certainty surrounding expenses and fees.
As the various pieces of the tax plan go into effect in the coming months, it will be important for those looking to buy or sell an aircraft to fully understand what the new legislation means for their personal or company tax position. SOLJETS' professionals work with every client at the early stages of an acquisition or sale to outline all relevant considerations, including additional expenses, unanticipated costs, and tax implications.