NBAA Tax References
NBAA's tax publications and related documents on this site are intended to provide you with
an introduction to relevant U.S. Federal and state tax rules, Federal Aviation Regulations
and other rules that impact business aviation. Since the materials are necessarily general
in nature, they are no substitute for the advice of your legal and tax advisors addressing
a specific set of facts that you may face.
Tax, Finance & Insurance News
2008 ESA Bonus Depreciation & Section 179 Expensing Provisions Explained
March 10, 2008
The Economic Stimulus Act of 2008 (ESA) includes provisions that may benefit companies that purchase aircraft for business purposes. In today’s climate, with many manufacturers holding multi-year backlogs, NBAA has been asked what benefit the ESA might offer business aviation. The ESA offers 50 percent “bonus” depreciation (which means the depreciation is accelerated in the first year the asset is placed in service) and increases in Section 179 expensing, which companies might be able to use for new aircraft, fractional aircraft shares or equipment upgrades. In a podcast presentation for NBAA, available at no cost to Members, NBAA Tax Committee Member Keith Swirsky explains the ESA and the potential offerings for the business aviation industry. Members can download the ESA presentation and podcast. This podcast complements other NBAA On Demand Education programs, including video replay of the popular Tax, Regulatory & Risk Management Conference available on CD-ROM or in streaming video format.
DOT Releases SIFL Rates for First Half of 2008
February 13, 2008
The U.S. Department of Transportation (DOT) recently released Standard Industry Fare Level (SIFL) rates for the six-month period from January 1 to June 30, 2008. These data are necessary when applying the IRS's aircraft valuation formula to compute the value of non-business transportation aboard employer-provided aircraft. The data also are needed to impute the income of the traveling employee, as required by the Internal Revenue Service Rules Section 1.61-21(g). NBAA Members may access the SIFL rates and NBAA's Personal Use Calculator, which assists flight departments with valuation of personal trips, on the SIFL page.
IRS Publishes 2008 Aviation Excise Tax Rates
December 28, 2007
The Internal Revenue Service (IRS) has published the 2008 inflation adjustments to the excise taxes due on commercial air transportation. The rates for 2008 are: domestic segment fee, $3.50; international arrival/departure tax, $15.40; and international arrival/departure tax for Hawaii or Alaska flights, $7.70. The IRS did not modify the 7.5 percent tax that applies to the amount paid for domestic commercial air transportation. Revenue Procedure 2007-66 will be modified in the near future to include these 2008 inflation adjustments. These tax rates are applicable until June 30 to coincide with the pending FAA reauthorization. Depending on action taken by Congress, these excise tax rates could either be extended again or modified if changes are made to FAA’s funding structure.
New FET Liabilities for Certain Part 91 and Fractional Ownership Structures
November 19, 2007
The common perception among industry professionals and aircraft owners that federal excise taxes (FET) are not applicable to Federal Aviation Regulation Part 91 operations for whole aircraft owners and fractional aircraft programs collect all applicable FET may change as of January 1, 2008. The Internal Revenue Service (IRS) issued final regulations (T.D. 9356) under the Self-Employment Contributions Act that affect the treatment of qualified subchapter S subsidiaries (QSubs) and single-member limited liability companies (SMLLC’s) for the purposes of FET. While intended for employment tax matters, the IRS may interpret the regulations to treat an SMLLC or QSub as an entity that provides “transportation services” to its member or shareholder, thereby subjecting the contributions and payments to the SMLLC or QSub to the FET imposed under IRC Section 4261, for periods commencing on or after January 1, 2008. Download the new FET resource (25 KB, PDF).
FEC Proposes Regulatory Changes on Candidate Travel
November 5, 2007
Last week the Federal Election Commission (FEC) issued a notice of proposed rulemaking (NPRM) that would amend its regulations to ensure consistency with statutory changes recently made by Congress. The proposed regulations would revise the rates and timing of payment for campaign travel on non-commercial aircraft. Under the new law, rates and conditions regarding campaign funds candidates may spend for travel on certain business aircraft differ depending on the office sought. The law also states that not only the candidate for election, but also those individuals traveling on behalf of candidates or their authorized committees, such as campaign staff, are subject to the regulations. Comments are due by November 13, and a hearing will be held on November 15. Review the NPRM (113 KB, PDF).
NBAA’s Bolen Represents Business Aviation at IRS Hearing
October 29, 2007
At a hearing last week, NBAA President and CEO Ed Bolen urged the Internal Revenue Service (IRS) and Treasury Department officials to modify the proposed regulations relating to certain non-business use of business aircraft to alleviate confusion and unnecessary administrative burdens for aircraft owners and operators. At the hearing, Bolen highlighted five key issues from the proposed regulations about which NBAA Members have expressed significant concerns, and include the industry standard for defining the term “aircraft operating expenses,” development of a charter rate method safe harbor, treatment of security costs, the method for aggregation of aircraft, and the tax treatment of charitable flights. The testimony followed extensive written comments NBAA submitted on the proposed regulations. Review Bolen’s full testimony (27 KB, PDF).
NBAA Submits Comments to IRS on Proposed Tax Regulations
September 17, 2007
Last week, NBAA submitted comments to the Internal Revenue Service (IRS) in response to its proposed regulations on certain non-business uses of aircraft. The proposed regulations follow IRS Notice 2005-45, which provided guidance for taxpayers on compliance with a provision of the American Jobs Creation Act of 2004, limiting deductions a company can take for certain non-business uses of aircraft. NBAA's comments commended the IRS and Treasury Department for certain aspects of the proposed regulations, including an option to use a flight-by-flight analysis calculation, rather than the occupied-seat-hour or occupied-seat-mile method. NBAA also raised numerous concerns and urged the IRS to implement reasonable regulations that will be easily administered. View NBAA's comments (154 KB, PDF).
For Those Who Can't Attend, NBAA Announces On-Demand Tax Conference
September 17, 2007
NBAA is pleased to announce the Association's NBAA Tax, Regulatory & Risk Management Conference will now be filmed and available in NBAA's suite of on-demand education offerings for the business aviation industry. Those wishing to participate in the Conference, but not able to attend in person, may purchase the on-demand version (streaming video from the Internet or video CD-ROM) to view the seminar online, anytime. In addition to video of each presenter, handout materials provided on-site will be available for download. Register to virtually attend the 16th Tax, Regulatory & Risk Management Conference and view other on-demand education offerings by visiting NBAA's on-demand education page.
NBAA Resource Explains Business Aircraft Tax Law Changes
July 30, 2007
On June 14, the Internal Revenue Service released the long-awaited proposed regulations on certain non-business use of business aircraft. The new regulations reflect amendments under the American Jobs Creation Act of 2004 and the interim guidance provided in Notice 2005-45 and apply to those taxpayers that permit specified individuals to use business aircraft for entertainment purposes. A new NBAA Member resource provides an overview of the proposed regulations and their effect on business aircraft owners. More.
NBAA Provides Article on Certain Non-Business Use of Business Aircraft
April 9, 2007
NBAA has made available a new article to Members on the conflicting regulations surrounding certain non-business use of business aircraft. The article, written by Jeff Wieand, first appeared in the 2007 NBAA Journal of Business Aviation Management, which mailed to Members earlier this year. The piece provides insight on the "alphabet soup" of business aviation regulations created by the policies of FAA, DOT, IRS and SEC – almost all of which are conflicting. Download the article (420 KB, PDF)
Tax Talk: Calculating Deadhead Flights for Entertainment Use Deduction Limitations
March 2, 2007
Due to changes in the deduction limitations for entertainment expenses, companies operating aircraft have recently had to confront the issue of how to apply the entertainment expense deduction limitations to deadhead flights. This issue can be particularly troublesome when an aircraft travels from its base to one destination for business purposes (the “Business Leg”) and then flies empty to a second destination (the “Deadhead Leg”) to pick up a passenger traveling for entertainment purposes and bring that passenger back to the base (the “Entertainment Leg”). NBAA has a new article addressing this challenging and complicated topic. View the article.
Fuel Fraud Tax Update: Associations Work to Ease Burden and Increase AATF Transfers
September 4, 2006
Last year, a change to the tax law forced jet fuel sold to FBOs and other ultimate vendors to have the 24.4 cents/gallon highway diesel tax rate embedded, with the taxes paid deposited into the Highway Trust Fund. The ultimate vendor of the fuel registers with the IRS using Form 637 and claims a refund for the difference between the 24.4 cents/gallon diesel rate and 21.9 cents/gallon jet fuel rate. Once the refund is claimed, the fuel taxes transfer from the Highway Trust Fund to the Airports & Airways Trust Fund (AATF). This process has been complicated and confusing for many in the industry. The staffs of NBAA and NATA have worked together to address concerns and propose simplifications to the process to the FAA, IRS and Congress. NBAA encourages ultimate vendors that have not registered with the IRS to do so. For more information, contact NBAA's Mike Nichols at mnichols@nbaa.org.
NBAA Comments on Securities & Exchange Commission Rulemaking
Updated April 11, 2006
NBAA filed comments with the SEC in response to their Notice of Proposed
Rulemaking (NPRM) regarding executive compensation and related party
transaction reporting requirements. While the SEC's 370 page NPRM addressed a wide variety of proposed regulations, NBAA's comments were
limited to the SEC's request for information with respect to the
valuation of perquisites and other personal benefits such as personal
use of employer provided aircraft. NBAA agreed with the SEC's assessment
that the current standard of reporting perquisites and other personal benefits, aggregate incremental cost, is the proper valuation
methodology. NBAA's comments elaborate on why aggregate incremental cost
is the right methodology and NBAA stated that "no other mechanism
reports the true cost to the company of providing such benefits, which
is the information that shareholders need to know." Read NBAA's comments (PDF, 145 KB).
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