Mooney: The Symbol of Performance™

On Wednesday, February 13, 2008, President Bush signed the 2008 Economic Stimulus Act, which gives incentive for business owners to write off business purchases. Here is a Question & Answer piece, with help from our partner's at Mooney Capital, to understand the bill and how it benefits you as a potential Mooney owner.

Q. What is the benefit of the bill when purchasing an aircraft?

A. There are 2 significant benefits to the bill that will help businesses - the Section 179 increase and the Bonus Depreciation.

Section 179
With respect to Section 179 - or the one-time expensing of business equipment purchased in a given year, the bill increases Section 179 expensing from $112,000 to $250,000, and more importantly raises the "cap" to $800,000. This new cap now allows a business buyer with total equipment purchases for the year of up to $800,000 to immediately expense $250,000 (although a business owner is not required to take the full write-off). The difference between the total aircraft purchase price and the amount a business owner elects to expense through this Section 179 provides the new 'depreciable value' (also known as the "remaining basis") of the aircraft. 

Bonus Depreciation
The new bill allows an owner to depreciate 50% off the top of their remaining basis then depreciate the aircraft as per their normal 5-year schedule.

Q. What does this mean to the purchase of a Mooney airplane?

A.  The Section 179 raised cap is significant for Mooney buyers in that the previous cap was $562,000 - which meant that a Mooney buyer acquiring an aircraft with a total cost of over $562,000 was unable to take advantage of any of the Section 179 expensing. This also means that Mooney buyers can elect to write off over 70% of the cost of their airplane in the first year.

Q. What does the depreciation mean in terms of savings?

A. Assuming a buyer is in a State and Federal tax bracket of 38%, this would equate to a first-year tax savings of between $140,000 and $175,000, not including the interest write-off also available from financing the aircraft. This bill will significantly lower the buyer's tax bill for 2008.

Q. Are there any special terms that come with the bill?

A. You must take delivery in 2008 to qualify for the expanded deductions. Bonus depreciation is available only on new aircraft used primarily for business purposes. The increase expensing election applies to new and used aircraft but is limited to taxable income of the taxpayer. FAA rules and regulations concerning sales tax issues and liability concerns are taken into account. For more information, Advocate Consulting is offering a free public webinar on the new law on February 27 at 3:00 pm Eastern.

Click here for Advocate Consulting's Aircraft Depreciation Calculator 

See your Tax Savings on:

Ovation2GX
Ovation3
Acclaim

For more information, call Louis Meiners at Advocate Consulting, 888-325-1942 or Rick Neely, Mooney Sales Director, 830.792.2081 or email rneely@mooney.com

*Any tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.