Aviation Tax

Effective January 1, 2018, a 1031 tax-deferred exchange may no longer be utilized for aircraft.

There are issues such as depreciation, passive activity losses, hobby loss rules and federal excise taxes to be considered.  There are also rules about charitable flights.

Consider the IRS and FAA implications if any company executives use the company jet for personal trips.  The FAA generally limits reimbursement and there may be a loss of federal tax deductions by the company and additional income for the executive.

There are state sales/use taxes, state property taxes and may also be registration requirements and gross receipts taxes.  Each state has different requirements and different exemptions. Any state in which the aircraft spends a significant amount of time should be reviewed for possible tax issues.  Some states have always been aggressive about taxes on aircraft and this trend is accelerating.