Tax Bill Quashes Bizjet Perk?
Possibly one of the nicest perks of corporate air travel has been quashed in a provision in a corporate tax bill signed into legislation by President Bush last week, and it could put a damper on the bizjet and fractional-ownership industry. While alphabets and manufacturers lauded a provision in the bill that extended the delivery dates on airplanes qualifying for deferred depreciation to the end of 2005 (a perk worth about $250 million) another measure was slipped in at the last minute. That measure drastically decreases the tax deduction corporations can claim when their aircraft are used by officers and employees of the corporation for personal business. According to Forbes Online, the provision, tucked in during the final Senate-House conference on the bill, will save the government $2.2 billion. Under the old rules, the owner of the plane could write off the full cost of a flight as long as the Standard Industry Fare Level (SIFL) was assessed as income against the recipient of the flight. The SIFL is roughly equal to the price of a first-class airline ticket and, depending on the plane, the flight profile and duration, the actual cost would be many times that amount. Under the new rule, the company can only deduct what it reports as income for the personal-use passengers. General Aviation Manufacturers Association spokesman Jeffrey Sural told Forbes that GAMA tried to lobby against the provision but it was steamrolled by public perception of corporate compensation excesses and a Congress trying hard to keep the bill from costing the government any money.