Year-End Tax Planning for Aircraft Owners: What to Check Before January
As year-end approaches, aircraft owners have a narrow window to review records, depreciation usage, and Qualified Business Use requirements. Angel Houck outlines what to check now, and why early preparation can simplify tax season and improve coordination with your CPA.
It is hard to believe, but year-end is almost here. As we count down the last couple of weeks of the year, there are a few things you can do to prepare your aircraft records for income tax reporting in the spring.
As mentioned in previous articles, the IRS record-keeping requirements for business aircraft include detailed flight logs and supporting documentation to substantiate business use. Now is a great time to review your current-year information and gather any missing flight details or documentation. The longer you wait, the harder it gets.
If you are planning on bonus depreciation this year, or have taken bonus or accelerated depreciation in the past, review your usage to make sure you have met the minimum Qualified Business Use (QBU) requirements. Ideally, this has already been addressed, but there may still be time to fit in additional qualifying business trips if needed.
Having your information ready early in the year can be a significant advantage. CPAs are generally more available immediately after year-end, before client information begins to pour in around mid-to-late February. After nearly 20 years as a practitioner, I can attest that turnaround times increase significantly as you move deeper into tax season.
Aircraft information is usually just one part of a much larger return, so the sooner that piece is complete, the sooner the rest of the return can move forward.
Maintaining your records throughout the year and conducting a focused review at year's end will help you prepare for filing season and bump you to the top of the list with your tax team.
Key Terms in Aircraft Management Agreements (Part 2)
John Farrish continues his breakdown of aircraft management agreements, focusing on financial oversight, maintenance authority, and termination, three areas where vague contracts create real risk for owners.
Every jet owner needs their aircraft properly looked after for both safety and the protection of their investment. Last month’s article addressed some of the commercial terms that should be captured in every owner’s management agreement. Let’s pick up where we left off and analyze other key items to include.
Financial Oversight
In the last article, we discussed the importance of knowing which costs are owed. But how will this be verified? Your management contract should include clear guidelines on invoice timing, payment timing, and any supporting invoices that should be available.
Each contract should include the owner’s right to audit and inspect the records to verify that the invoices match the underlying costs.
When the manager is also chartering the plane to third parties for the owner, this audit right is essential to verify the allocation of costs (and revenue!) between the manager and owner, and to confirm that the aircraft use is following the contract on some nuanced items like the allocation of empty leg costs.
Maintenance
One of the most important reasons to use a professional management company is to ensure the plane is properly maintained and cared for. But the maintenance plan needs to be fleshed out in advance and put in writing.
Will the manager be performing some maintenance themselves? If so, is it included in the management fee, or will the manager also charge an hourly rate?
How will approvals be handled for big-ticket items or expensive inspections? Some owners want to pre-approve every nickel or dime (cumbersome, and your management company might not like you very soon); others prefer not to be bothered with pre-approval unless the invoice exceeds a certain threshold, well into the thousands of dollars.
Termination
We previously stressed the importance of defining terms and establishing termination rights for both the owner and the manager. But what should actually happen when the relationship ends?
Many operational invoices have a billing lag, and they continue to roll in after termination. Most management companies understandably prefer to retain part of the owner’s operating deposit for some time after termination to cover invoices the owner is responsible for. This is fair enough. But how much should the manager retain to cover these costs, and at what point should the remaining balance be refunded to the owner? These answers need to be documented in advance.
The biggest protection upon termination for an owner needs to be clearly written instructions in the management contract on what happens to the plane and logbooks. The management agreement needs to clearly state that the owner gets immediate possession of the aircraft and records, so that they can’t be held hostage to force an owner to pay disputed bills.
An owner’s management company will be the face of their aircraft ownership experience, and it is a critical relationship. The management agreement and these key terms are imperative for setting expectations and obligations, and for preserving the peace and providing a respectful break-up when the time comes.
This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, and are purely informational. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.
Navigating January, the new December for financing deal flow.
Mike Smith explains why aircraft financing no longer slows down after December 31 and how an extended “year-end plus January” closing season is changing the way lenders and buyers need to plan.
Greetings from a busy year-end closing office at Scope Aircraft Finance!
Normally, after the clock strikes midnight on December 31, we can all breathe a collective sigh of relief. The busy pendulum swings to a slower pace in the first quarter. That trend changed last year with the anticipation of tax law changes under the incoming Trump administration.
The January slowdown we’re accustomed to didn’t occur, as several transactions were delayed into January fundings to take advantage of anticipated tax opportunities in 2025.
Halfway through December, we’re seeing the same volume trend for the second year in a row. Not only are we pacing for a record December, but we also have a strong January closing pipeline. While we always welcome the opportunity to serve our customers and help with whatever closing timeline they need, this “year-end plus January” closing volume does seem to be a new trend across the industry, and something we’re still adapting to.
The challenge, from my view, is ensuring a “not year-end” January closing still happens efficiently on the heels of a busy December. How do we do that? It’s pretty simple. We need to operate with clarity.
In our bank, the phrase “clear is kind” has become quite popular and for good reason. Clarity helps ensure we’re on the same page and pushing toward the same result. Clear communication and clear expectations help keep everyone aligned from start to finish.
January is right around the corner, and we can all help make January closings happen so long as we’re clear on timing expectations and capacity constraints as we work through the December year-end volume.
So, if you have a January closing, ensure you’re communicating clearly with your banker or escrow agent about your needs, and we’ll be there to support you, even if we’re running a little slowly in January from all the cookies and eggnog we had after a busy year-end.
I hope you enjoy the rest of the holiday season!
Goodbye 2025, Hello Soft Market
Tom Hauge closes out 2025 with a clear-eyed look at a softening aviation insurance market, what’s driving it, why year-end timing matters, and how aircraft owners can position themselves for better coverage and rates.
As we close in on the conclusion of a fantastic business environment in 2025, and as I have noted in previous columns, we have seen some turbulent times in aviation insurance this past year. The “turbulence,” however, is a very positive thing for consumers who are seeing softening rates and additional underwriting options and capacity.
The last weeks of the year will see a hurried pace of closings for aircraft buyers looking to capitalize on bonus depreciation tax incentives for year-end purchases. We at Wings are seeing a record number of submissions for new and pre-owned aircraft purchases being worked through the Christmas holiday season.
It is always challenging to manage last-minute insurance requests in a month that sees early office closings with brokers and insurers, and two holiday breaks when seemingly everyone is away from the office. It is always best practice to allow your insurance broker a solid week’s time, following receipt of the formal application information, to fully shop your policy and receive replies from all viable insurers.
With turbine-class aircraft, most insurers still rely on a human underwriting interface for insurance brokers, so it takes some time for all those “humans” to respond to the hundreds of submissions insurance carriers receive daily. If you wish to set yourself up for success and secure the sharpest, broadest policy available, allow your broker a solid week to work through their process.
Certainly, deals can be hurried and quoted or bound within a few business days' time, but it’s very unlikely your broker is going to be able to be thorough with underwriting companies when given only a couple of days to work with. I always use the expression “help me help you,” which means providing complete information on the front end while also allowing me a solid business week to do my work in the underwriting market. The success of the broker and the quality of the insurance quote oftentimes depend on the time you allow a broker to do their work in the insurance underwriting market.
I hope you all have a great end to the year and a successful 2026!
A Year-End Leadership Question Every Aviation Owner Should Ask
Dustin Cordier explains why many capable aviation leaders feel overloaded, not because the business is broken, but because clarity lives in people instead of systems. He shows how leadership capacity quietly becomes the constraint when systems fail to keep pace with growth.
By year-end, most leaders in business aviation aren’t short on insight.
They’re short on capacity to hold the same standard everywhere at once.
Not because they don’t care.
Because the business has outgrown the way clarity is being carried.
When Activity Masks the Real Problem
In business aviation, loss of clarity rarely looks dramatic.
Trips still get covered because “we’ll figure it out.”
A key customer still calls the owner directly.
A maintenance issue gets solved through heroics instead of process.
A sales opportunity moves forward because one person knows how to navigate it, again.
Nothing is technically broken.
Flights still move.
Deals still close.
Customers stay happy.
But the business feels heavier than it should.
That’s usually the tell.
When execution depends on who’s available, who has history, or who knows the backstory, leadership has quietly shifted from being a system to being a person.
I know this pattern well because I’ve been the person the system quietly depended on, and it took longer than it should have for me to admit that was the real risk.
How This Actually Shows Up
I see this pattern repeat across otherwise well-run aviation businesses:
- A charter operation that runs clean—until the owner is out of pocket
- A brokerage where pricing discipline changes by relationship
- A sales team that performs best when the founder is in the conversation
- An operations group that relies on “that one person” to keep things from breaking
Most leaders explain this away as commitment.
Or experience.
Or the reality of a complex, regulated industry.
Sometimes that’s true.
More often, it’s a signal that clarity is being carried instead of shared.
Leadership Isn’t About Doing More
Strong leadership doesn’t fail because people stop working hard.
It fails when standards become optional depending on context.
Aircraft type.
Customer.
Crew.
Timing.
When standards live in people instead of systems, accountability becomes situational.
Decisions drift.
Culture follows.
The irony is that capable leaders can sustain this far longer than they should.
Their competence masks the risk.
The business stays “successful” while becoming increasingly dependent on them.
That dependency is usually invisible - right up until it isn’t.
What Actually Scales in the Best Aviation Teams
The strongest aviation leadership teams don’t rely on presence to maintain performance.
They rely on clarity around:
- Who decides
- What matters now
- How work hands off
- What “good” actually looks like
Leadership in those companies isn’t heroic.
It’s repeatable.
And that’s why it survives growth, regulation, turnover, and time away.
A Year-End Question Worth Asking
As you close out the year, here’s the question most owners avoid:
Where does this business still work only because I’m personally involved?
And just as important:
What would quietly drift if I wasn’t?
Those answers rarely point to a talent issue or a market problem.
They point to a leadership system that hasn’t kept pace with the business.
And in aviation, as everywhere else, what doesn’t scale eventually becomes a constraint.