Take advantage of current benefits before they expire.
Equipment is probably one of your most significant investments especially in aviation. If you are considering additional investments in equipment, there is a significant advantage to purchasing capital equipment before the end of 2013. The current law allows you to deduct up to $500,000 (subject to limits) of new or used equipment acquired in 2013 (so called Section 179 deduction). In addition, current law allows you to deduct an additional 50% of the remaining cost of new equipment acquired in 2013 (so called Bonus Depreciation). However, for 2014, the Section 179 provision is scheduled to be reduced to $25,000 and the Bonus Depreciation provision is scheduled to expire altogether.
Highlights for Tax Benefits
•The allowable Section 179 deduction (for federal tax purposes) is $500,000 on the cost of new and used equipment purchased through 12/31/2013
•Allows a 50% bonus depreciation (for federal tax purposes) of the cost of new equipment (under certain conditions) through 12/31/2013
Section 179 Deduction
For 2013, companies can expense up to $500,000 as a deduction (for federal tax purposes) as long as total qualified purchases do not exceed $2.0 million.
•Applies to new and used equipment
•Can be combined with bonus depreciation
•Beyond the $2 million maximum equipment investment threshold, there is a dollar for dollar phase-out of the Section 179 Deduction
•Subject to taxable income limitations
Bonus Depreciation
The enhanced bonus depreciation benefit (for federal tax purposes) allows an additional immediate write-off of 50% of the depreciated balance for capital expenditures as depreciable property (new equipment only).
•Applies to new equipment only that is placed in service in the United States in the 2013 calendar year
•Equipment must be depreciable under the Modified Accelerated Cost Recovery System (MACRS) and have a depreciation recovery period of 20 years or less
These tax provisions can add significant cash flow for your business, but in order to take advantage of this opportunity, the equipment must be purchased and placed in service by the end of 2013. Contact us at 317-858-6000 x2004 for answers to all of your aviation tax related questions.