Income Tax Deductions on Aircraft


Where an aircraft is used for business purposes, the aircraft can generally be depreciated for tax purposes using the "special depreciation allowance" (SDA), the "modified accelerated cost recovery system" (MACRS) or the "alternate depreciation system" (ADS). The SDA is available for new aircraft and parts.  The use of the ADS method may be required where the aircraft is:
* Not used more than 50% for business purposes (special rules apply to aircraft).
* Used "predominately" outside of the United States (special rules apply to U.S. registered aircraft).

The table below shows the percentage of the aircraft cost that is deductible each year The rates below apply to noncommercial aircraft. Different rates may apply where the aircraft is used primarily to transport persons or property for hire.

  Year:____ ___1___ ___2___ ___3___ ___4___ ___5___ ___6___ ___7___
  SDA 40.00% 22.40% 13.44% 8.06% 8.06% 4.04%  
  MACRS 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%  
  ADS 8.33% 16.67% 16.67% 16.67% 16.66% 16.67% 8.33%

The first year depreciation may be decreased (and later years increased) where the aircraft is:
* Purchased by an entity (including an LLC) which was formed during the year.
* Purchased in the last 3 months of the tax year.


The tax rules require that records be kept to document business use. This is true, regardless of whether the aircraft is owned by an individual or a business.  Attached is a sample aircraft log.