As a CPA, I often talk to aircraft owners who’ve relied on advice from friends or non-aviation advisors—only to have been hit with big tax surprises later.
That’s why, if you’re considering purchasing a jet, upfront tax planning is essential. The rules can be tricky, and there are many important considerations.
Understanding the Tax Landscape
Most prospective aircraft owners using their aircraft for business purposes focus on federal tax benefits. These include deductions like accelerated and bonus depreciation for bona fide business use.
However, improper ownership structure, cash flow planning, or tax reporting can eliminate those deductions. That’s why it’s critical to address these issues before buying.
Don’t Forget to Consider State and Local Taxes
What many aircraft owners overlook are tax implications at the state and local level.
While some state taxes are unavoidable, early planning can often reduce large upfront payments. If ignored, the result may be significant penalties and interest on top of the tax owed.
As I’ve shared in a previous article, both the IRS and states are getting savvier about aircraft ownership—and they’re actively watching for non-compliance.
With the right plan in place—and proper execution—you can avoid unexpected tax bills and penalties. Involve an aviation tax advisor from the start.
And make sure your broader tax team is part of the conversation to achieve the best results.