Federal Taxes
Federal Excise Taxes
Both private and commercial business aircraft operators pay Federal excise taxes (FET) either on fuel or on the transportation of persons or property. This section provides information on FET applicability, current tax rates, and best practices for collecting and remitting the tax. Learn More
Depreciation
Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS) or the Alternative Depreciation System (ADS). Learn More
Passive Activity Loss
Individual taxpayers must aggregate the income and loss from their passive activities each year to determine their net passive income or loss. A net passive loss for the year generally is nondeductible for that year but may be carried forward to reduce net passive income in future years. Learn More
Charitable Flights
Many businesses generously make their aircraft available for charitable flights. Prior to doing so, it is important to know the FAA and IRS rules applicable to these flights and any tax deductions the company might want to take associated with the contributions. Learn More
Hobby Loss Rules
Business owners can use different legal entities, including C corporations, S corporations, partnerships, and LLCs. Although these arrangements generally do not create income tax benefits, the depreciation rules often cause the entity owning the aircraft to have a tax loss. IRS auditors can disallow deduction of these losses, relying on the “hobby loss” rules. Learn More
Federal Tax News
- NBAA Urges IRS to Address Two Tax Problems in Priority Guidance Plan
- May 7, 2012
NBAA’s Tax Committee requested that the IRS address two specialized tax problems that owners of business aircraft can experience: 1) depreciation limitations in I.R.C. § 280F(b) when leasing aircraft to 5-percent owners and related parties, and 2) tax consequences of the use of a business aircraft for charitable purposes. The issues, which NBAA had previously raised with the IRS, are in addition to the other high-priority regulatory issues, such as FET applicability in aircraft management company arrangements. These submissions were in response to the IRS request for industry input as it develops its 2012-2013 Guidance Priority List. Review the charitable flights filing (100 KB, PDF) and the 280F(b) filing (100 KB, PDF).
