On September 27, 2010, President Obama signed into law the "Small Business Jobs Act of 2010." One aspect of this law is of particular interest to the business aviation industry – the extension through 2010 of the bonus depreciation program under Section 168(k) of the Internal Revenue Code. The bonus depreciation program is applicable to certain kinds of "qualified property." The program provides a taxpayer with a depreciation deduction equal to 50% of the taxpayer’s adjusted basis in the qualified property for the taxable year in which the property is placed in service. Bonus depreciation has been touted as incentive for businesses to accelerate replacement and purchases of equipment.
The business aviation industry has generally been a prominent advocate for bonus depreciation. The new law extends the bonus depreciation program for another year – through the end of 2010. Prior to the passage of the new law, the program was only available for property that was acquired by a taxpayer before, or that was acquired by a taxpayer pursuant to a written contract that was entered into before, January 1, 2010. Also, if the property in question was an aircraft, it had to be put into service by the taxpayer before January 1, 2011. Under the new law, these deadlines have been extended to January 1, 2011 and January 1, 2012, respectively. The various technical requirements that define "qualified property" under Section 168(k) of the Code are otherwise unchanged.