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by Aric Peters on March 6 2026
By Aric Peters, Aviation Practice Leader
For most companies, the decision to own an aircraft starts with productivity. It’s about saving time, reaching locations commercial airlines can’t serve, and giving leadership teams control over their schedules.
But another factor that can materially change the economics of ownership is 100% bonus depreciation. When available, it allows businesses to deduct the full purchase price of qualifying assets in the year they are placed into service, significantly improving first-year cash flow.
Understanding 100% Bonus Depreciation
Under federal tax law, qualifying aircraft may be eligible for accelerated first-year depreciation, potentially up to 100% of the purchase price, depending on current phase-down schedules.
In general, an aircraft must:
- Be placed into service during the applicable tax year
- Be used more than 50% for business purposes
- Maintain proper documentation and flight records
- Be owned and structured in a way that complies with IRS rules
An Illustrative Example
Consider a simplified example:
- Aircraft purchase price: $10,000,000
- Business use: 100%
- Federal tax rate: 37%
Potential first-year deduction: $10,000,000
Potential federal tax savings: $3,700,000
Why Structure Matters
The way an aircraft is owned and operated can affect both tax eligibility and insurance coverage.
A few areas require particular attention:
Ownership structure.
Aircraft are commonly held in LLCs or special-purpose entities. The ownership, operating, and named insured entities on the policy must be aligned.
Business vs. personal use.
Accurate flight logs are critical. They support IRS documentation requirements and can also be important in the event of an insurance claim.
Lease or charter arrangements.
Dry leases, related-party use, and Part 135 operations introduce additional regulatory and insurance considerations.
Lender requirements.
If the aircraft is financed, lenders will typically require specific liability limits, loss payee provisions, and breach-of-warranty protections.
Taking a Disciplined Approach
Aircraft ownership works best when tax planning, operational planning, and risk management are considered together. That typically includes coordination between tax advisors, aviation counsel, insurance specialists, and the ownership group.
When structured properly, 100% bonus depreciation can meaningfully improve the financial case for ownership, while thoughtful planning helps ensure the aircraft is operated and protected in a way that supports long-term use.
The Virtus Aviation Approach
At Virtus Aviation, we work with aircraft owners, CFOs, and advisors to ensure the insurance structure for an aircraft aligns with how it is owned and operated. Aircraft transactions often involve multiple entities, lenders, and operational arrangements, and misalignment can create unnecessary risk.
Our role is to bring aviation-specific expertise to that process. By working alongside legal, tax, and operational advisors, we help ownership teams structure insurance programs that support the broader strategy behind aircraft ownership—protecting the asset, satisfying lender requirements, and ensuring the program holds up when it matters most.
If you are evaluating an aircraft acquisition our aviation team is prepared to support you from initial planning through policy placement and beyond.
