Tax, operations, inspection and closing for business aircraft buyers
JFA Aviation | jfa-aviation.com | [email protected]
Important: JFA Aviation and its brokers are not CPAs, financial advisors, fiduciaries or attorneys. This guide is general education only, not tax, legal or financial advice. We recommend that every buyer engage their own CPA, financial advisor and aviation attorney before buying, structuring, chartering or financing an aircraft.
A note from James
I fly for a living as an airline captain, and I've spent my career around people who buy, sell and operate serious assets. With aircraft, the expensive mistakes rarely come from the airplane itself. They come from the wrong operating structure, a tax plan that doesn't match how the airplane is really flown, a rushed pre-buy, or a sloppy closing.
This guide covers the questions I'd want answered before I put my own money down. Every figure is tied to a current source, listed at the back with dates.
Capt. James Fachtmann JFA Aviation
1. Mission first
How many passengers? How far, how often, and from which airports? Will the airplane fly only you and your company, or will it earn charter revenue when you aren't using it? Those answers decide the category of aircraft, the crew you need, the operating rules you fly under and the tax result. Start there, not with a spec sheet.
2. Part 91 or Part 135: who has operational control?
- Part 91 covers private, non-commercial flying. You (or your company) keep operational control, and you cannot sell transportation to others.
- Part 135 covers on-demand charter. A certificate holder has operational control and its standards apply.
- Charter leaseback. Many owners place their aircraft on a Part 135 operator's certificate so it can fly charter when the owner isn't using it. It can offset costs, but it adds wear, scheduling trade-offs, and contract terms you need to read closely.
The FAA warns that unauthorized Part 135 flying, often called illegal charter, remains a problem. Sham dry leases ("wet leases in disguise") are a common trap, where the airplane and pilot are effectively provided together. If anyone is paying to ride on your aircraft, have aviation counsel review the structure first. Leases of large civil aircraft must also include a truth-in-leasing clause (14 CFR 91.23; FAA AC 91-37B).
Same dollars. Different outcome.
One path ends with a payment to the Treasury. The other ends with an aircraft that gets your team where it needs to be, on your schedule. The guide explains the 50% and 25% business use tests, Part 91 versus Part 135, and the records that hold up.
3. Tax: what the law says and what has to be true
What changed. The One Big Beautiful Bill Act (Public Law 119-21, signed July 4, 2025) made 100% bonus depreciation permanent for qualified property acquired after January 19, 2025 (IRS Notice 2026-11). For the first tax year ending after January 19, 2025, taxpayers may elect a lower rate, 40%, or 60% for certain aircraft and long-production property. Aircraft under a written binding contract before January 20, 2025 are not treated as acquired after that date.
Section 179 limits. $2,500,000 for tax years beginning in 2025, reduced once qualifying purchases exceed $4,000,000. For 2026 the figures are $2,560,000 and $4,090,000 (IRS Rev. Proc. 2025-32). The deduction is also limited to business taxable income.
The tests:
- More than 50% qualified business use, and a separate 25% test for business aircraft. Qualified business use is determined flight by flight, and each passenger on every leg is classified. Fail either test and you're on straight-line depreciation, with recapture of prior excess depreciation (IRS Pub 946).
- Contemporaneous records: the cost, time and place of each trip, its business purpose, and the business relationship of everyone aboard.
- Entertainment and personal flights carry their own disallowance and income-inclusion rules. Your CPA needs to plan for them before the first flight, not after.
- Passive activity and hobby-loss rules can limit losses from a charter or leasing structure.
- Recapture on sale. Gain is generally taxed as ordinary income up to the depreciation you took.
State sales and use tax varies by state and by where the aircraft is based and delivered. Plan the delivery location with your advisors.
4. Pre-buy inspection and records
- Independent pre-buy inspection at a facility you choose that knows the type, not the seller's shop.
- Logbooks and records review: complete, continuous airframe, engine and propeller records; airworthiness directive compliance; damage history; and status of inspections and component times.
- Engine and APU program status, where applicable, and whether enrollment transfers.
- Avionics and equipment that match your mission and any upcoming mandates.
- Discrepancies become a repair list or a price adjustment under the purchase agreement.
5. Closing and registration
- Escrow and title. When JFA Aviation holds a deposit, it is held in JFA's State of Florida registered escrow account. Use an aviation title company to handle FAA filings and to search FAA records for liens. Interests in airframes type certified for at least 8 people including crew, helicopters for at least 5, and qualifying engines are also registered with the International Registry under the Cape Town Treaty.
- FAA registration. Aircraft registration is handled by the FAA Aircraft Registry. Registration certificates are valid for seven years (14 CFR 47.40).
- Delivery. Where and how delivery happens matters for sales and use tax. Coordinate it with your advisors.
6. Insurance, financing and crew
- Insurance. Pricing follows pilot experience, the aircraft and how it's used. Get an aviation insurance broker involved at the offer stage, and confirm your pilots meet the underwriter's training requirements.
- Financing. Lenders look at your finances, the aircraft's age, records and value, and how it will be operated. Terms vary widely, so get pre-qualified early.
- Crew. A pilot in command of a turbojet or a large aircraft must hold a type rating for that aircraft (14 CFR 61.31). Budget for recurrent training, and for a second pilot where the aircraft or your insurer requires one.
The 2026 clock is running.
To claim depreciation for this tax year, the aircraft generally has to be placed in service by December 31. Pre-buy, records review and closing take time. Start with your CPA and JFA Aviation now.
Email [email protected]Tax results depend on your facts. JFA is not a CPA, financial advisor, fiduciary or attorney. Confirm every strategy with your own advisors.
7. Buyer's checklist
- ☐ Mission defined
- ☐ Operating structure (Part 91, leaseback or management) decided with aviation counsel
- ☐ CPA and tax plan in place before signing
- ☐ Flight logging system set up from day one
- ☐ Independent pre-buy completed
- ☐ Records reviewed
- ☐ Escrow and title search done
- ☐ International Registry filing, if required
- ☐ Insurance bound
- ☐ Crew qualified and approved by your insurer
- ☐ Delivery location planned for sales and use tax
8. Talk to JFA Aviation
If you're thinking about buying or selling an aircraft, let's talk early, before the offer. I'll help you frame the mission, line up the right professionals, and keep the deal clean from letter of intent to registration.
Email [email protected] | jfa-aviation.com
Disclaimer
JFA Aviation and its brokers are not CPAs, financial advisors, fiduciaries or attorneys. This guide is general education only. It is not tax, legal, accounting, financial, insurance, lending or investment advice, and it does not create a client, advisory or fiduciary relationship. Laws, IRS and FAA guidance, and market terms change, and how they apply depends on your facts. We recommend that every buyer engage their own CPA, financial advisor and aviation attorney before buying, structuring, chartering or financing an aircraft.
Sources (accessed November 12, 2026)
- IRS, Notice 2026-11. https://www.irs.gov/pub/irs-drop/n-26-11.pdf
- IRS, "Working Families Tax Cuts: Businesses" (OBBBA Sec 70301 summary, 40%/60% election). https://www.irs.gov/newsroom/working-families-tax-cuts-businesses
- IRS, Rev. Proc. 2025-32. https://www.irs.gov/pub/irs-drop/rp-25-32.pdf
- IRS, Publication 946 (2025), business aircraft 50% and 25% tests, records, recapture. https://www.irs.gov/pub/irs-pdf/p946.pdf
- 26 U.S.C. 179. https://www.law.cornell.edu/uscode/text/26/179
- IRS, Publication 925, Passive Activity and At-Risk Rules. https://www.irs.gov/pub/irs-pdf/p925.pdf
- FAA, Safe Air Charter: Pilots, Owners, and Operators. https://www.faa.gov/about/initiatives/safecharteroperations/pilots-owners-and-operators
- FAA, AC 91-37B, Truth in Leasing. https://www.faa.gov/documentLibrary/media/Advisory_Circular/AC_91-37B.pdf
- 14 CFR 91.23, Truth-in-leasing clause requirement. https://www.ecfr.gov/current/title-14/chapter-I/subchapter-F/part-91/subpart-A/section-91.23
- 14 CFR 47.40, Registration expiration and renewal. https://www.ecfr.gov/current/title-14/chapter-I/subchapter-C/part-47/subpart-B/section-47.40
- FAA, Aircraft Registration. https://www.faa.gov/licenses_certificates/aircraft_certification/aircraft_registry
- 14 CFR 61.31, Type rating requirements. https://www.ecfr.gov/current/title-14/chapter-I/subchapter-D/part-61/subpart-A/section-61.31
- FAA, Aircraft Registration: The Cape Town Treaty. https://www.faa.gov/licenses_certificates/aircraft_certification/aircraft_registry/cape_town_treaty