Complicated aircraft transactions require careful planning and creative solutions to minimize taxes.
As the travel needs of corporate executives evolve and become more demanding, flight departments often respond by upgrading their fleets. A flight department may sell a depreciated aircraft that has run the course of its useful life or no longer serves the flight department’s mission and replace it with an aircraft that is better suited to their needs.
When selling and replacing business aircraft, TVPX can add significant value to the transaction by structuring the disposition and purchase as a tax deferred exchange under IRC Section 1031.
Section 1031 of the U.S. Internal Revenue Code allows investors to defer capital gains taxes on the exchange of like-kind properties.
What may seem like a straightforward exchange is not always the case. To successfully structure and complete an exchange of aircraft, there are many critical details that need to be considered.
- Sales Tax: Are you exempt? Do you have a comprehensive sales tax strategy? What are the options?
- Other taxes: Are there other state taxes may affect the cost of your transactions?
- Timing: Do you have exchange timing issues? Are you buying before selling? What are your options?
- Financing and equity: How much equity do you have in the aircraft being sold? How much of the replacement aircraft do you plan to finance? Is there and imbalance that needs to be addressed?
These are just a few issues that you may face if you are contemplating an exchange of aircraft. TVPX has the expertise to guide you and will lead you by the hand throughout the entire 1031 exchange process.
Call us at +1 978.610.1234 for a consultation.
A Successful Tax-Deferred 1031 Exchange: View Case Study here.