2012 Bonus Depreciation for Business Aircraft

Posted on October 31, 2012

By Scott Horton

Bonus Depreciation For New Aircraft Purchases – 50% in 2012

Under the “normal” accelerated depreciation rules, a taxpayer using an aircraft predominantly for business can
only deduct a maximum of 20% of the purchase price in the first year with the remainder of the cost depreciated
over the five year asset life. As part of the economic stimulus package passed by Congress in 2010, if a new
business aircraft is placed in service in 2012, the taxpayer can deduct 50% of the purchase price as a bonus in
addition to the normal accelerated depreciation deduction for the year. Currently, the 50% bonus is set to expire
at the end of 2012.

Election to Expense up to $139,000 For New or Used Aircraft Under Section 179
The tax code allows taxpayers to elect to deduct up to $139,000 of the purchase price for new or used business
aircraft placed in service in 2012. For new equipment, Section 179 can be used in addition to bonus
The Section 179 election has several limits. First, the maximum amount of $139,000 begins to phase out dollar
for dollar when the amount of capital equipment placed in service by the taxpayer in 2012 reaches $560,000.
Second, the expenses are limited to the taxable income of the taxpayer. In other words, this election cannot be
used to create a loss. If a taxpayer elects to use Section 179, the taxpayer can choose to expense any amount
between $1 and the allowed maximum.
NEW 2012 Diamond DA40 XLS
Purchase Price = $400,000
100% Business Use

Section 179 Expense = $139,000
Bonus Depreciation = 130,500
Normal Depreciation = 26,100
Total First Year Depreciation $295,600


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