WINGS, WRITE-OFFS,
AND THE IRS

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In a potentially game-changing move for aircraft owners and operators, the Internal Revenue Service (IRS) has issued interim guidance that could expand eligibility for bonus depreciation under Section 168(k) of the Internal Revenue Code. Released in response to lingering uncertainties in the business aviation community, the new guidance aims to clarify when and how aircraft placed into service in connection with long-term contracts may still qualify for bonus depreciation, offering a possible tax windfall for those with strategic timing.

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At the heart of the matter is whether aircraft delivered under binding contracts signed before key cutoff dates can still be eligible for 100% bonus depreciation. Previously, ambiguity surrounding the “written binding contract” rule raised concerns about disqualification if delivery or substantial manufacturing occurred after the phase-out schedule began. The new IRS guidance addresses that ambiguity by allowing greater flexibility for aircraft tied to long-lead-time production schedules, potentially including those modified, refurbished, or completed after the effective dates.

For high-net-worth individuals, corporations, and flight departments looking to maximize tax efficiency, this opens a window of opportunity. Strategic acquisitions, especially when aligned with planned upgrades or completion work, could now enjoy accelerated write-offs if executed properly. Bonus depreciation remains one of the most powerful tools in the tax planning arsenal, allowing qualified buyers to deduct a significant portion, sometimes the entire cost, aof eligible aircraft in the first year of service.

However, there are important caveats. The guidance is currently interim, and further clarification or changes may follow. It’s also vital for buyers to work closely with aviation-savvy tax advisors to ensure documentation and contract structures meet IRS requirements.

Still, the timing is notable. With 100% bonus depreciation phasing down annually (dropping to 60% in 2026 barring legislative change), the updated guidance comes at a critical moment for aircraft buyers seeking to optimize capital expenditures before the window narrows.

In short: smart structuring could mean more sky and less tax. For business aviation stakeholders, the message is clear—consult, act, and capitalize. Because in this evolving tax landscape, those who move quickly may find themselves not only airborne—but financially ahead of the curve.

Because sometimes, the most radical act is simply to return with intention.

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