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Bonus Depreciation Incentives: The Impact on General Aviation Aircraft
Karen C. Miller,
Union University
J. Riley Shaw, University of Mississippi
Tonya K. Flesher, University of Mississippi
ABSTRACT. The use of corporate aircraft has increased as businesses place more value on mobility. The bonus depreciation incentives of 2002 and 2003 provided growth opportunities for the general aviation market by allowing additional depreciation deductions for the purchase of new corporate aircraft. These incentives allowed more than twice the traditional MACRS allowance for depreciation the year an asset is placed in service, but the present value of the tax savings after the full depreciable life of the corporate aircraft only averaged two percent. This study reveals that the bonus depreciation incentives did not generate significant growth in the general aviation aircraft market via increased production of aircraft. These incentives may have simply slowed the recession that might have taken place in this industry otherwise. However, the incentives in this study did play a significant role in determining which type of aircraft to purchase, piston or turbine.
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