Aviation Tax Update About ATC Founded in 2003 Offices in Columbus, - - PowerPoint PPT Presentation
The CARES Act & Tax Advantage of f Business Aviation Daniel Cheung CPA Aviation Tax Consultants LLC May 13, 2020 Cutter Aviation Aviation Tax Update About ATC Founded in 2003 Offices in Columbus, Indiana and Scottsdale, Arizona
Daniel Cheung CPA Aviation Tax Consultants LLC
May 13, 2020
Founded in 2003 Offices in Columbus, Indiana and Scottsdale, Arizona Specializes in income, sales and use tax planning for business aircraft owners Helps clients and their advisors navigate the myriad of regulations between IRS, state tax laws and FAA Regulations
Sales and use tax planning Closing remarks
Those who need to travel for their businesses Business owners and self-employed individuals Not retirees or W-2 earners
Increased from 50% to 100% since the JOBS Act in December 2017 Applies to all business aircraft Planning required to address other tax codes
Hobby loss Passive activity loss Related party leasing Personal use
A myth… Certain ownership structures can indeed draw unnecessary attention to the tax retur One important planning objective is to mitigate IRS audit risk
Net Operating Loss Carry-back regulations reinstated Applies to corporate (C corp) and individual taxpayers (S corp and LLC) Overall tax loss in 2020 2020 tax loss can be carried back to 2015 tax year as a deduction Can result in tax refund for income taxes paid in 2015 Complying with other regulations to insure loss can be deductible
2020 taxable income before aircraft - $2M Purchase $3.2M business aircraft in 2020, 100% business use Net tax loss - 2020 $(1.2M) Income tax saved in 2020 - $700,000, based on 35% tax bracket $(1.2M) loss can be carried back to 2015 tax year. Tax refund due - 2015 $420,000 Total tax refund due - $1,120,000
2020 Taxable Income $2,000,000 Acquisition of a Business Aircraft $3,200,000 100% Bonus Depreciation $(3,200,000) 2020 Tax Loss $(1,200,000) Income Tax Saved - 2020 35% $(700,000) CARES Act Net Operating Loss Carryback: 2020 Tax Loss $(1,200,000) Income Tax Refund Due - 2015 35% $(420,000) Total Income Tax Saved $1,120,000
2020 Taxable Income $2,800,000 Acquisition of a Business Aircraft $4,500,000 100% Bonus Depreciation $(4,500,000) 2020 Tax Loss $(1,700,000) Income Tax Saved - 2020 35% $(980,000) CARES Act Net Operating Loss Carryback: 2020 Tax Loss $(1,700,000) Income Tax Refund Due - 2015 35% $(595,000) Total Income Tax Saved $1,575,000
2020 Taxable Income $3,400,000 Acquisition of a Business Aircraft $5,500,000 100% Bonus Depreciation $(5,500,000) 2020 Tax Loss $(2,100,000) Income Tax Saved - 2020 35% $(1,190,000) CARES Act Net Operating Loss Carryback: 2020 Tax Loss $(2,100,000) Income Tax Refund Due - 2015 35% $(735,000) Total Income Tax Saved $1,925,000
2020 Taxable Income $3,400,000 Acquisition of a Business Aircraft $5,500,000 100% Bonus Depreciation $(5,500,000) 2020 Tax Loss $(2,100,000) Income Tax Saved - 2020 35% $(1,190,000) CARES Act Net Operating Loss Carryback: 2020 Tax Loss $(2,100,000) Income Tax Refund Due - 2015 35% $(735,000) Total Income Tax Saved $1,925,000
2020 Taxable Income $7,000,000 Acquisition of a Business Aircraft $10,000,000 100% Bonus Depreciation $(10,000,000) 2020 Tax Loss $(3,000,000) Income Tax Saved - 2020 35% $(2,450,000) CARES Act Net Operating Loss Carryback: 2020 Tax Loss $(3,000,000) Income Tax Refund Due - 2015 35% $(1,050,000) Total Income Tax Saved $3,500,000
Complement our client’s existing team of advisors Provide expertise knowledge of the interaction of tax and aviation regulations Experience in tailoring an ownership structure that best suits
Daniel Cheung: 317-716-3388 (cell) daniel@aviationtaxconsultants.com Fred McCarter: 812-371-5322 (cell) fmccarter@aviationtaxconsultants.com Kyle Kamman: 812-350-2147 (cell) kyle@aviationtaxconsultants.com Office: 812-342-9589 www.aviationtaxconsultants.com