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Aircraft buyers based in the US who plan to use their new and used planes primarily for business purposes have entered 2025 with reasons for hope that the year might prove favorable in terms of the tax treatment the US Federal Government affords their newly acquired aviation assets.

That hope is new, and it follows a year in which the tax picture at both US federal and state level for aircraft buyers began to show early signs of darkening.

In 2024, under what proved to be the outgoing Biden Administration, the US Internal Revenue Service (IRS) pronounced that it would direct greater scrutiny toward finding out to what extent owners were using their aircraft for business purposes – as legislation conferring tax benefits on purchases of aviation assets meant them to do.

The IRS further indicated it would put that scrutiny into practical effect by conducting increased numbers of tax audits on owners of new and used business and private aircraft.

That planned intensification of IRS focus would mean those owners who couldn’t document clearly that at least 50% of the flying they conducted with their aircraft during the year would be ineligible for the bonus depreciation schedule available, under the 2017 Tax Cuts and Jobs Act.

As matters stand today, the act’s provisions for bonus depreciation on aircraft and various other purchased assets are scheduled to end in 2027.

But the dawning of 2025 – and with it the assumption of power by the Trump Administration – has brought what is widely expected to be a dramatic sea change in the US Government’s regulatory ethos as it affects many areas of business. That sea change is expected to include a relaxation of tax legislation, and perhaps a contraction in the size and oversight power of the IRS.

As of this early-February writing, it remains to be seen to what extent the Trump Administration will honor the political promises the incoming Administration made during last year’s Presidential campaigning process.</p>

But public pronouncements and hastily drawn-up Presidential Executive Orders, transmitted soon after Donald Trump resumed office on January 20, indicated that on a wide variety of fronts Trump and his team intended to back their previous rhetoric with prompt action.

However, purely as far as aircraft purchasing and its associated tax planning in 2025 are concerned, it appears clear from the start that if they are all acted upon, the Trump Administration’s promises will create a complex and possibly confusing background for buyers’ decision- making this year.

But that complex background could include some clear bright spots for those contemplating purchasing business and private aircraft in 2025.

According to the three experts interviewed for this article, one ray of hope for US buyers of aircraft this year is that under the new and possibly more taxation-lenient Trump Administration, a potentially weakened, smaller and less enforcement-focused IRS will not put into effect the increased audit program it promised aircraft buyers in 2024.

The experts reckon another important hope is that, in concert with a compliant Congress, the new administration will make permanent the business-friendly bonus depreciation provisions enacted in 2017’s Tax Cuts and Jobs Act – doing away with what otherwise would be their 2027 sunset.

Will 100% Bonus Depreciation Return?

Scott Burgess, Partner at Aviation Legal Group, says some Business Aviation industry insiders are expecting that when the Trump Administration enacts new tax legislation – which will likely be in the latter half of this year – the new rules will renew the 100% bonus depreciation last available in 2022 for purchases of new and used aircraft.

Were this to happen, its provisions might act in either of two ways, one potentially more tax-beneficial than the other to buyers of Part 91 aircraft.

At present, for FAR Part 91-certified aircraft flown at least 50% of the time on documented business missions, the bonus depreciation schedule enacted in 2017 allows for an annually steady declining percentage of depreciation over a five-year schedule from 2022, from 100% in Year 1 (2022) to 20% in Year 5 (2026).

According to Leah Alexander, Aircraft Sales &amp; Acquisitions for Duncan Aviation, in practice that means the level of bonus depreciation allowed in 2025 is 40% for business use, and applies to most new and used aircraft placed into service this year, even if they were bought before 202

So, if an owner bought an aircraft in 2024 – when the bonus depreciation rate was 60% – but only puts it into service this year, then the owner is only allowed to depreciate 40% of the cost of the aircraft in their 2025 tax return.

But if an owner puts a new 2025-purchased aircraft into service in 2026 and the purchase meets the requirements for “Certain Aircraft and Transportation Property” as specified in Section 168(K)(2)(B) of the Internal Revenue Code (IRC), they would be allowed to depreciate 40% of its cost in 2026, instead of the 20% bonus depreciation otherwise specified for 2026 by the Tax Cuts and Jobs Act of 2017.

So, it will be important for anyone planning to buy an aircraft in 2025 and put it into service in 2026 to consult with their tax advisor to assess if the transaction will meet the ‘Certain Aircraft and Transportation Property’ IRC criteria and, if so, whether the purchase is likely to benefit their expected 2026 depreciation planning and tax position.

Yet, this situation could change markedly for the better as far as aircraft buyers in 2025 are concerned, if new tax legislation expected from the Trump Administration this year does come into effect.

The BizAv industry is hoping that the Trump Administration’s new tax legislation will allow 100% bonus depreciation every year. For every year in which that tax legislation remained in effect, it would mean buyers of Part 91 aircraft flying their aircraft at least 50% of the time for business purposes would be able to depreciate the entire cost of their aircraft in the year they bought it.

The alternative, a somewhat less attractive scenario, which new Trump Administration tax legislation might offer aircraft owners is that it could renew the five-year declining-balance bonus depreciation the existing rules allow before the 2027 ‘sunset’.

Questions Remain on 2025 Aircraft Buying Strategy

One consequence of the US Business Aviation community’s widespread belief that new federal tax legislation, beneficial to aircraft purchasing will be enacted this year by the new Trump Administration, is that some potential buyers decided in 2024 to delay their aircraft acquisitions to this year, according to Burgess.

Even the timing of any aircraft purchase within this year could be important in terms of maximizing the amount of bonus depreciation available for the buyer, he points out.

Burgess also notes that while the US BizAv industry still confidently expects 100% bonus depreciation to return later this year, it is not clear yet whether the hoped-for new legislation will it to new and used aircraft alike, or whether – as was the case in times gone by – the bonus will apply only to purchases of new aircraft.

The key question for any buyer planning to acquire an aircraft in 2025 is whether to purchase an aircraft now and hope it is retroactively covered for 100% bonus depreciation in 2025 by new tax legislation, or to forgo buying until the new tax rules are in place and no unanswered questions remain regarding allowable depreciation.

Even if new legislation is favorable to both new and used aircraft, and even if it applies retroactively, buyers should remain vigilant in documenting their business use of the aircraft, says Alexander.

“It’s unlikely that needing that business use case will change,” she says. “Under the previous Trump Administration, we saw a contraction in IRS audit activity. But that’s not to say that the next Administration won’t revert to increased auditing. So don’t rest on your laurels in terms of documenting the business use of your aircraft.”

Buyers should also make sure their tax, banking and other advisors structure their aircraft acquisitions carefully, in order to extract the maximum benefit from the depreciation rules available to a given deal at the time, Alexander advises. Transactions should also be structured with close attention paid to making the maximum benefit for buyers’ overall business strategies and taxable income positions.

“Is it sensible to wait until a new tax regime arrives to allow you to offset your profits with this transaction?” she questions. If the business needs the aircraft now, or if the aircraft is ideal for the buyer’s needs and taste and the buyer might risk missing out on the aircraft later, then the buyer should complete the purchase.

Either that, or seek to come to an arrangement with the seller to complete the acquisition officially at a later date when more beneficial tax legislation might have been enacted.

Possible Tariffs on the 2025 Skyline

Many of the pronouncements made by President Trump both shortly before and soon after he took office detailed how he planned to impose new or increased tariffs on the goods the US imports from a wide slew of its trading partners; particularly those with which the nation normally has warmly cordial relations.

If enforced over the longer term against countries such as Canada, Mexico, EU nations (particularly France), China, or others at which Trump might take aim in the future, new or increased tariffs on manufactured goods could pose sizable headaches for buyers of new business and private aircraft – and potentially for their manufacturers, the world over.

While Burgess notes that Bombardier and Dassault might quickly run afoul of new tariffs threatened by Trump against France, Canada and Mexico, it should be noted that both OEMs have a considerable presence in the US, with both boasting multiple production, maintenance, warehousing and office spaces throughout the country.

Brazilian OEM Embraer also has large sales and completion facilities in the US. Thus, in Business Aviation terms, any tariff action taken by the Trump Administration that might hit Bombardier, Dassault or even Embraer (Brazil had not featured as a target in Trump’s tariff discussions as of early February) would be almost certain to hurt the US economy just as much as it would the originally intended target nation.

Additionally, China and other Asian and Middle East nations are home to many customers for Gulfstream’s Ultra-Long-Range jets. And Textron is the world’s biggest manufacturer of turboprop business and utility aircraft and also makes more business jets than any other company, with its aircraft being purchased by customers worldwide.

As a result, retaliatory imposition of tariffs by other countries could hurt the US business and private aircraft manufacturing industry greatly.

In addition, the on-off nature of tariff-based trade wars and the unintended consequences that can arise from them make diplomacy by tariff a risky business for aircraft sellers, buyers and manufacturers.

The US Trade Commission’s application (at Boeing’s behest) of 300% tariffs on US sales of the Bombardier C-Series – now the hot-selling Airbus A220, the orderbook for which has shot up to nearly 1,000 aircraft following Bombardier’s sale of the program to Airbus – provides a famous example of a US OEM being stung badly by hasty tariff action.

For all these reasons, “we can hope that the tariff threat is merely a negotiating tool,” says Alexander.

Could the IRS Code Section 179 Provisions Change?

For buyers of small new Part 91 aircraft, or older used piston, turboprop and jet aircraft, another potentially important point in any new Trump Administration federal tax legislation is whether the new rules make any changes to the existing tax deduction allowed under Section 179 of the US Internal Revenue Code.

As matters stand, for aircraft bought in 2025 for business use and costing up to $1.25m, Section 179 allows the entire cost of the aircraft to be taken as a deduction in the buyer’s tax return.

Although Section 179 may only be applicable in certain scenarios, for purchases of smaller aircraft it can provide a benefit similar in effect to the 100% bonus depreciation last allowed in 2022 for larger business aircraft, according to KJ McCarter, an Aircraft Tax Advisor for Aviation Tax Consultants.

The Section 179 deduction is subject to three limitations, McCarter notes. The first is a limitation on the amount of the deduction which can be claimed in the buyer’s tax return – $1.22m in the 2024 tax return for aviation assets bought in 2024 and $1.25m for aviation assets bought this year.

Also affecting the potential Section 179 deduction is a threshold investment amount. For 2025 that Section 179- qualifying threshold investment amount is $3.13m. Placing into service during the year any greater investment in Section 179-qualifying equipment reduces the potential deduction from the potential $1.25m maximum by the amount the buyer’s investment exceeds $3.13m.

So, if a buyer were to place into service in 2025 Section 179-qualifying equipment costing $4.38m or more (i.e., $3.13m plus $1.25m), then the buyer would not be able to claim any amount as a Section 179 deduction. But were the buyer to place, say, $4.2m of such equipment into service during the year, then they could deduct $180k in their tax return under the Section 179 provision.

The third limitation potentially affecting any Section 179 deduction is the amount of taxable income the equipment a buyer obtains in the year from the active conduct of a trade or business.

If the potential Section 179 deduction exceeds the amount of taxable income the equipment buyer generates from their trade or business, then the deduction is reduced by the amount by which it exceeds that taxable income. However, the taxpayer can carry forward that exceeding amount to their next tax year and add it to the amount they would otherwise deduct in their tax return for that year.

Bear in Mind State and County Taxes

In all the discussion and expectation about the possibility of beneficial new federal tax legislation being enacted later this year, the parts that state sales and use taxes and county property taxes play in the overall aircraft- buying and aircraft-owning picture could potentially pass without much notice.

But those taxes are not going away. Indeed, quite the contrary is true, according to McCarter, who cites the increasing presence, relevance and burden of state and county taxes as a key reason why aircraft buyers in the US should always make sure they have a tax advisor in the advisory teams they put together to help them buy their aircraft.

“Across the board there is constant movement in terms of the state sales and use tax climate,” he says. “In general, states are becoming more proactive and organized in their efforts to impose use taxes and counties are becoming more proactive and organized in their efforts to impose property tax.”

Not only are states focusing more on generating additional sales and use taxes from business and private aviation ownership and operations, but they are also becoming much more technologically savvy in determining exactly where such aircraft are based, according to McCarter.

As a result, it is becoming harder for owners to claim for tax reasons that their aircraft are based in one state when in fact they mainly operate to, from or within another. “States are starting to use different methods to track planes to determine where they are based,” he says. “So, it is critical to understand if you owe [state] use tax or if you qualify for an exemption.”

One well-known example is California, which levies a hefty use tax which is often close to – or even exceeds – 10% on business aircraft unless their operations meet its Interstate Commerce Exemption, or another California state exemption. If the operations do meet the exemption, then the aircraft and their owners are not subject to any California use tax liability.

Among other requirements, California’s Interstate Commerce Exemption requires more than 50% of the aircraft’s flight hours in a specified six-month period to be operated on interstate commerce missions. It also requires that those missions are fully documented and accounted for.

Whether or not their aircraft use can qualify for the California Interstate Commerce Exemption, owners who base their aircraft in California are subject to county personal property taxes, levied by the county in which a given aircraft is based. But those taxes are generally around 1% a year, according to McCarter.

Some states are known for having higher sales and use taxes than others, and are keener to collect those taxes, Burgess notes, adding “Florida, Texas, Colorado, California and New Jersey are all relatively strict and aggressive in trying to collect tax.”

Interesting Prospects Ahead

So far in 2025, little or nothing seems to have changed in terms of state tax regulations compared with last year, Burgess says. “I’m not aware of any significant changes in sales or use taxes this year or late last year. But their laws come in on a phased basis, and a lot take place in October.”

The likelihood of changes in some states’ taxation of business and private aircraft in Q4, together with the prospect of new federal tax legislation in the latter half of 2025 – probably beneficial to aircraft owners, but to what degree nobody knows yet – may make for a very interesting year this year, for owners and tax advisors alike.

It will be even more interesting for owners, their accountants and their tax advisors if the IRS is somehow able, under the Trump Administration, to follow up its Biden Administration promise to audit business and private aircraft usage more closely.

That possibility, while perhaps remote, means “it’s critically important to follow the IRS’s rules [on business and private use of aircraft], so that your tax advisors can demonstrate within an IRS audit that the regulations have been properly adhered to,” McCarter concludes.

Keeley is a member of the National Business Aviation Association’s Environmental Subcommittee. Keeley was invited to visit the United States Congress to discuss with members of Congress the importance of legislatively supporting sustainable practices in business aviation. If you have any questions about sustainable aviation fuel (SAF), carbon credits, book and claim or electric vertical takeoff and landing (e-VTOL) aircraft, please do not hesitate to contact Keeley.

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Group has held in-person and virtual events for newcomers to the industry

The International Aircraft Dealers Association’s (IADA) newly-formed NextGen Committee has made a strong start in its first year, the U.S.-based organization reported this week. The group recently held a networking event in San Diego and provided an update on its efforts to nurture the next generation of business aircraft transaction professionals.

Among the events organized by the committee in its inaugural year was the Business of Flight session staged jointly with Embry-Riddle Aeronautical University. NextGen committee vice chair Richard McEachin, who is an attorney with the Aviation Legal Group, and IADA-certified broker Kandi Spangler, who is JetAviva’s managing director, presented a session on ethics in aircraft transactions.

To encourage connections between younger members, IADA has launched a series of virtual events. In the new “Fuel Stop” sessions, aviation sales veteran Dustin Cordier hosts 30-minute conversations with industry leaders who share their insights and knowledge. In its “Afterburner” events, IADA members can interact with NextGen Committee members to learn how they can use resources such as the community board portal, social media channels, and educational opportunities.

Jordan Scales, director of aircraft management with Clay Lacy Aviation, has led the committee’s efforts to engage with students. He liaises closely with the Alpha Eta Rho fraternity to expand the list of universities and schools offering scholarships backed by the IADA Foundation.

John Bowman, director of business development at Hatt & Associates, heads up the Future Leaders subcommittee. This group launched the “Fuel Stop” initiative to help advance the careers of young professionals.

NextGen committee chair Jessica Belcher and IADA-certified broker Spencer Bloomer from Jet Transactions have led IADA’s efforts to boost its social media presence. They have established dedicated LinkedIn and Instagram accounts, as well as the association’s community board to keep members connected and informed.

IADA reported that its dealers collectively handle around 50% of used business aircraft transactions, buying and selling more aircraft by dollar value than the rest of the world’s dealers combined. Among the association’s accredited dealers, 99% do business in North America, 69% in Europe, 56% in Latin America and the Caribbean, 45% in the Asia Pacific region, 37% in the Middle East, and 33% in Africa.

US Sales & Use Tax Tips

Every US state has its own combination of sales and use taxes, property taxes, and sometimes other surcharges it assesses on business aircraft based in, or even just flying to, the state. So how do you know where to arrange delivery of an aircraft to make best use of these? Chris Kjelgaard asks the experts…

In addition to accounting for sales and use taxes on business aircraft, some states have generous exemptions too, so it’s fair to say that a tax consultant should always be one of the first team members hired by business aircraft buyers in the US to ensure the purchase is handled professionally, smoothly, and concludes successfully.

“The most important thing is to call [the tax advisor] first, so you don’t make bad decisions,” says Daniel Cheung, Principal of aviation accountancy firm Aviation Tax Consultants. “Make your tax planning proactively – call in a tax consultant in advance,” before the aircraft transaction gets under way.

Another reason why a tax consultant should be a core member of any US-based business aircraft acquisition team is that “the [US] tax code is not friendly in terms of complexity,” adds Cheung. “You have to deal with the IRS, the FAA, and even the Securities and Exchange Commission if you’re a public company.”

Cheung explains “proper planning obviously is the key” for any owner buying a business aircraft to minimize their tax exposure to the purchase. Assessments of sales and use taxes depend on where the aircraft is based or hangared, “particularly if the aircraft lives in two or three places”, in which case it may be subject to sales and use taxes in more than one state.

For instance, he notes, “Chicago, Illinois is extremely difficult in terms of tax, but Gary, Indiana [just over the Illinois-Indiana state border a few miles south of Chicago] is not.”

According to Cheung, “80% of the tax planning is based on IRS requirements”. These requirements should be a more immediate concern for the buyer’s purchase advisory team than compliance with FAA regulations, he says, because compliance is ongoing but the tax payment is one-time.

“So the primary discussion is focused on income tax requirements and ownership structure, because the key to the planning is ownership structure”, says Cheung.

“Who owns the aircraft is the key in terms of getting the bonus depreciation rights” which can be offset against tax liability, and “the corporate structure of the client will determine the structure of the ownership of the aircraft”.

Business Aircraft Taxes: Every State is Different

What makes the presence of at least one aviation tax consultant on any aircraft buyer’s negotiation team even more vital is the fact that every state has different tax rules.

“Most US states and some counties, municipalities and cities, effectively as sub-divisions of state governments, have [their own levels of] sales tax and use tax, and some have property tax,” says Scott Burgess, Partner at Aviation Legal Group.

Additionally, “some states also have a registration requirement – Massachusetts, for example – and you have to pay a small registration fee annually of $3,000-$5,000, give or take, usually depending on the jet’s maximum gross takeoff weight.”

If an owner decides to base their business aircraft at a certain airport and uses the aircraft to fly frequently to certain places, this can have important implications for the amounts of aircraft- associated sales, use and property tax for which the owner is liable – implications which can be either positive or negative.

Some states don’t have sales taxes for business aircraft at all, and some have partial or full exemptions on sales and use taxes, often known as ‘flyaway exemptions’ or ‘interstate commerce exemptions’.

When negotiating a business aircraft purchase, an important part of the planning is to look at where the sale will be consummated, says Burgess, “to make sure the point of delivery is somewhere which either has an exemption, or doesn’t have sales and use taxes.”

In this respect New York, Connecticut and Massachusetts are useful delivery jurisdictions, because they don’t impose sales taxes on aircraft, according to Burgess. “To a limited extent”, South Carolina also can be a useful delivery jurisdiction because its sales and use taxes on business aircraft are low.

Quite apart from where the delivery location is agreed for the purposes of minimizing tax – that location is not always the same as the one where the Pre-Purchase Inspection (PPI) takes place – the location where the aircraft will be based is also important for tax purposes.

“How and where you operate, and where the aircraft is based, is important, because it is possible to trigger sales or use tax in more than one state,” adds Burgess. “The assessment of use tax, and the obligation, depends on the location of the consumption of the [services provided by the] aircraft.

“And there’s also property tax. If the aircraft is to be used in several jurisdictions, especially for a company which has facilities in those states, do you pay property tax in one state, or pro-rate?”

Burgess offers three hypothetical examples of business aircraft acquisitions and the subsequent intended use of the aircraft to show just how important the owner’s decisions regarding delivery location, base and usage can be in terms of taxation impact.

Example 1: Planning the BizJet Delivery Location on Tax

In the first scenario, an owner decides to purchase a European- registered Cessna Citation jet which Gulfstream Aerospace has taken in part trade against the sale of a new Gulfstream jet to a European customer.

The aircraft is flown to Gulfstream’s headquarters in Savannah, Georgia.

The aircraft meets the European Union’s deregistration and export requirements and also clears the US Customs importation process satisfactorily. Now the buyer has a pre- purchase inspection performed on the imported Cessna Citation in Georgia and is prepared to complete the purchase.

However, the buyer’s negotiating team strongly advises against taking delivery of the aircraft at any Georgia location, even though it is already in Savannah. This is because Georgia has a relatively high percentage sales tax for aircraft.

The state does offer a “flyaway” exemption against sales tax, but that is valid only for aircraft manufactured in Georgia and delivered by the manufacturer to a customer in Georgia. Essentially, the flyaway exemption only extends to new aircraft manufactured by Gulfstream and delivered in-state.

So, the buyer and seller agree to fly the aircraft out of Savannah to an airport in another state which has a lower sales tax rate. For used, non-Gulfstream aircraft which are bought in Georgia, this typically means flying the aircraft a relatively short distance to an airport in either South or North Carolina, both of which have very low rates of sales tax on business aircraft.

Usually, owners buying aircraft located in Savannah fly the aircraft on a 10 to 20-minute hop to Charleston, which lies just over the South Carolina border 120 miles’ flying distance from Savannah. It is very easy for a Gulfstream mobile maintenance team then to drive to Charleston to perform all the work on the aircraft needed for it to obtain its FAA Certificate of Airworthiness.

…The Florida Complication…

Continuing with this first scenario, let’s now assume the new owner wants to bring the aircraft to Florida and base it there. According to Burgess, the owner now faces two choices in terms of tax liability, one of which – if it can be arranged in accordance with all legal and airworthiness regulations – appears financially preferable.

The simpler of the two choices, but almost certainly far costlier in terms of tax liability, is to pay the 6% use tax that Florida levies on business aircraft. (Florida does not levy a property tax on aircraft.) Every Florida county also levies a discretionary surtax on based aircraft, but this is usually in the $50-$75 range, according to Burgess.

If the aircraft in our scenario cost $20 million, the 6% Florida use tax would be $1.2m.

Alternatively, let’s imagine the owner’s tax team advises them to lease the aircraft to a company – which may be related to the owning company but for FAR Part 91 certification purposes must also be an ongoing company which operates the aircraft.

This then necessitates the aircraft owner to procure a Florida annual resale certificate for sales tax, then pay sales tax on the lease revenue levied at a rate of 6%. Importantly, however, the owning company is no longer liable for the 6% Florida use tax – so it doesn’t have to hand over a $1.2m lump sum to the State of Florida.

If, theoretically, the fair market value of the monthly lease rental paid by the operator to the owner is $180,000, then each month the owner remits 6% of $180k as sales tax to the state – a payment of $10,800. Thus, in a year its sales tax payments to Florida on the lease revenues will total $129k – a far cry from the $1.2m lump sum it would otherwise have to pay to Florida’s Department of Revenue.

And Burgess says if the lessor is qualified it can calculate and remit the sales tax assessed on the rental payments using a mileage-apportionment method (i.e., flight in Florida airspace prorated against all flights made by the aircraft), significantly reducing the sales tax due on the rental payments.

Example 2: Post-Acquisition Business Jet Sales & Use Tax Implications

The specialist aviation accountants and lawyers hired by aircraft buyers also contribute value to the transactions in knowing exactly what the implications of the aircraft’s post-purchase pattern of operations are for exposure to use taxes on a state- by-state basis.

If a buyer isn’t careful, operating an aircraft to, from and within some states, or basing it for even a relatively short time in some states, can generate hefty usage tax assessments by the state(s) in question.

Our next scenario featuring a buyer’s planned activities with an aircraft they have newly bought provides a good illustration. Here, Burgess posits that a North Carolina resident purchases a new business jet for $20m from Textron and takes delivery in Wichita, Kansas.

Since North Carolina’s sales tax on business aircraft is capped at a maximum $1,500, the buyer is content to pay sales tax on the aircraft in North Carolina and initially base it there. But they have an office in Florida and intend to use the aircraft to make visits to that office.

In this case the buyer’s tax advisors will inform the buyer that if they fly the aircraft to Florida within six months of purchasing it, and if during that period it spends more than 21 days cumulatively (not necessarily in one continuous stretch) in Florida, the state will then assess 6% use tax – $1.2 million on a $20 million purchase price – on the aircraft, less the $1,500 sales tax which the buyer paid in North Carolina.

In such a scenario, Burgess cautions that buyers should not hope that the Florida Department of Revenue will not notice that their aircraft has visited one or more airports within the state. Via scrutiny of ATC flight plans and airport records, the Department keeps a close eye on aircraft movements and temporary basings at all Florida airports.

Buyers must also be very mindful of the potential taxation exposures – at state, county and municipal levels – of operating their business aircraft to and within other US states, according to Burgess.

For example, even if an aircraft qualifies for California’s Interstate Commerce Exemption on aircraft sales and use taxes (because the owner uses it for flights to or from California and other states), the owner must still be aware that the aircraft may incur California county or city property taxes depending on the airports it uses and at which it spends time on the ground within the state.

In Texas, similarly, which for taxation-administration purposes has created a structure of “appraisal districts”, owners need to be aware of local property taxes assessed by the appraisal district(s) to and from which their aircraft are flying, Burgess adds.

Example 3: Out-of-State Business Jet Owner Tax Gotcha

Out-of-state owners should be particularly aware that even if they immediately fly an aircraft purchased in Texas to another state, thus qualifying for the flyaway exemption on taxation that Texas allows for aircraft departing the state within a certain period, if they fly their aircraft back to Texas for even a temporary visit within a year, Texas may assess use tax on the aircraft.

Burgess offers a third hypothetical example in which a resident of New York state purchases a Bombardier business jet from the manufacturer’s facility at Addison Field, Texas.

The new owner flies the aircraft out of Texas within the time required for the aircraft to meet the state’s flyaway exemption and bases the aircraft in New York State.

(New York is a very good state in which to base an aircraft, according to Cheung, because it has not assessed any taxes on aircraft for the past decade – though there is some political pressure within the state legislature to change that situation. That pressure is being strongly resisted by various aviation and political bodies and communities.)

But should the New York-based owner consider flying their jet to Texas for any reason within 12 months of the purchase closing, Burgess says the Texas Department of Revenue can take the position that the aircraft returning to Texas triggers the 6.25-8.25% use tax which would have been assessed on the aircraft had it remained in-state after the owner bought it.

BizAv Sales & Use Tax Clarity: Communication Is Key

As with every other aspect of pursuing the purchase of a business aircraft, frequent, clear communication between the buyer and their aviation tax/legal experts is key to obtaining the best possible taxation result from the deal, says Burgess.

Only by knowing exactly how the buyer (advised by their negotiating team) intends to handle the mechanics of the transaction can their tax advisors learn where the pre-purchase inspection is planned to be performed.

Armed with that knowledge, the tax specialists can advise the buyer where to arrange delivery of the aircraft. If the airport at which the inspection is being conducted is in a state which has little or no sales tax, or has a flyaway exemption, then delivery can take place at that airport.

However, if the inspection is being conducted in a state with less favorable tax rules, for delivery to occur the aviation tax experts can advise the buyer to negotiate with the seller to fly the aircraft from the pre-purchase inspection location to an airport in a state in which delivery would be more suitable for tax purposes.

Additionally, says Burgess, “It’s important to talk about where the aircraft is going to spend most of its time. You’re looking for utilization patterns, so you can assess all the different exposures [by likely destination state] and mitigate them.”

In-House Business Aircraft Charter Ops and Federal Excise Tax

Aviation tax experts also need to know if there are potentially other factors affecting the purchase taxation-wise.

“One of the things we look for, especially for a client who is inclined to allow the aircraft to be used for Part 135 charters to generate revenues, is if we’re in a jurisdiction with a commercial use exemption,” says Burgess. If the aircraft is delivered or based in such a jurisdiction, then it may be exempt from state sales and property tax.

Moreover, will the buyer’s own missions be operated under Part 135 rules? If so, is it possible for the buyer to lease the aircraft to an operator with which it has a direct financial relationship. That operator could be a subsidiary of the buyer’s company but it would need to be an ongoing company in its own right, and genuinely be operating the aircraft itself, Burgess highlights.

If those conditions are met, then the operator need not collect from the buyer the 7.5% US Federal Excise Tax normally levied on the fair market value of each US domestic charter flight, says Burgess.

When the buyer of a business aircraft leases it to another entity, so that the buyer’s own operations can be performed under Part 135 charter regulations, the need for a direct financial relationship between the buyer and the entity operating the aircraft rules out the operator carrying passengers on behalf of a third party, according to Burgess.

So, if the buyer were a car manufacturer, the charter operator could carry the car OEM’s own employees – but it would not be allowed to fly managers of third-party car dealerships around, even if they were flying on the aircraft buyer’s own business.

Some Final Sales &amp; Use Tax Thoughts

Cheung says the role of an aviation accountant in a buyer’s negotiating team is an important one – and the owner should retain the relationship on a continuing basis after the purchase closes.

“Combating bad information and correcting errors [during the transaction process] is a key part” of the aviation accountant’s role in the team, he says, adding that one key task for the accountant and lawyer within the team is “to do the structure of ownership [of the aircraft] to mitigate audit risk”.

However, after the purchase closes, as the buyer, “You had better be keeping the records of the deal and following their advisors’ recommendations to continue to mitigate audit risk, Cheung warns. If the owner of the aircraft does that, they will find that “some states’ audits are friendly if you follow the rules” on ownership structure, tax reporting and other key areas of interest to state revenue departments regarding the aircraft.

Overall, says Cheung, while most US states have sales and use taxes and sometimes also personal property taxes as well (or alternatively to use taxes), “Most states have some sort of exemption available. Very few of our clients have to pay the sales or use tax.”

Would-be aircraft buyers who are NBAA members can undertake useful preliminary research into the taxation aspects of their planned purchases by consulting the ‘NBAA State Aviation Tax Report’.

BOISE, Idaho, Nov. 13, 2023 –&nbsp;The International Aircraft Dealers Association (IADA) has appointed a committee of young aviation professionals to lead the aircraft resale organization’s focus on its future.

NextGen is a new IADA initiative aimed at supporting and empowering young professionals in the business aviation industry. The IADA NextGen Committee recently held its first meeting at IADA’s annual fall meeting.

“IADA is delighted to unveil the establishment of our young professionals committee, IADA NextGen,” said IADA Executive Director Wayne Starling. “We look forward to supporting their initiatives and eagerly await the promising influence of their voices within our association.”

NextGen Leadership
Chairing the NextGen Committee is Jessica Belcher of Exclusive Aircraft Sales. Joining her on the new committee are Richard A. McEachin from Aviation Legal Group, P.A., Patrick Bradley of Global Wings LLC, Kyle Wagman of Leading Edge Aviation Solutions LLC, and Sam Gilchrist of Gilchrist Aviation Law, P.C.

IADA NextGen is dedicated to the future progress of the industry, identifying challenges and supporting solutions related to sustainability, technology, fuels, manufacturing, and other key aspects of aviation. The IADA NextGen Committee focuses on networking, professional development, mentorship and community outreach to help cultivate the next generation of aviation leaders.

The committee offers unmatched networking opportunities through industry events, an internal member directory, and online forums. NextGen members have access to webinars, career development resources, and recognition programs for emerging leaders. IADA’s Accredited Dealers and Verified Products and Services Members will serve as mentors, passing on knowledge and experience to help NextGen professionals succeed.

The NextGen Committee will also connect with students and universities through internship programs and campus events. Committee members will work with the IADA Foundation to advance these outreach efforts, including scholarship opportunities.

The five core pillars of IADA NextGen are:
Networking
NextGen facilitates peer-to-peer connections and organizes industry events and meetups. The IADA directory enables NextGen members to discover fellow colleagues in their vicinity or while traveling, fostering meaningful connections.

Future Leaders
NextGen empowers members through education via webinars, professional development opportunities, and the recognition of emerging leaders.

Mentorship
IADA leaders actively mentor NextGen members, providing invaluable education and guidance. This program helps to ensure a transfer of experience and knowledge.

Paying It Forward
NextGen pays it forward by connecting with incoming university students, serving as liaison to universities and IADA member companies. This includes facilitating internships, organizing events and more. NextGen collaborates with the IADA Foundation on this initiative.

Industry Progress
NextGen is dedicated and mindful of future industry progress including sustainability, identifying roadblocks and challenges as well as supporting actionable solutions to technology, fuels, manufacturing, and other pivotal elements of aviation.

About the International Aircraft Dealers Association
IADA’s dealers consist of the top 17 percent of the world’s experts who handle 50 percent of used business aircraft sales. IADA-Accredited dealers buy and sell more aircraft by dollar volume than the rest of the world’s dealers combined, averaging over 1,300 transactions and $11.8 billion in volume per year.

Ninety-seven percent of IADA dealers do business in North America, 66 percent of dealers operate in Europe, 58 percent are active in Latin America and the Caribbean, 45 percent do business in Asia and the Pacific region, 39 percent work in the Middle East and 41 percent in Africa. IADA also represents a variety of IADA-Verified product and aviation services members that operate with the highest professional standards in the industry.

For more info go to https://www.iada.aero

About AircraftExchange.com
IADA’s AircraftExchange marketing search portal is the only site where every aircraft listed for sale is represented by an IADA-Accredited dealer. AircraftExchange enables users to create a confidential dashboard of business jets for sale, filtered based on their features and amenities, class size, age, and price. Users can browse through data-rich listings for available business aircraft. For more info go to https://www.AircraftExchange.com

IADA Media Contact
Jim Gregory for International Aircraft Dealers Association
James Gregory Consultancy llc
jim@jimgregoryworks.com
(316) 706-9147
James Gregory Consultancy llc
5152 W. 115th Terrace
Leawood, KS 66211-2016