12 Nov 2025, 04:26 [ UTC - 5; DST ]
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Post subject: Re: Best t-prop or jet for $1.3m?  Posted: 13 Dec 2017, 11:19 |
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Joined: 11/09/13
Posts: 1910
Post Likes: +927
Location: KCMA
Aircraft: Aero Commander 980
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Quote: . I have to decide if the substantial increase in cost for a V is worth it. I may be better off, say, to buy a Conquest II, invest my left over money, and then later buy a CJ3 later. Save all your money and wait for the CJ. There is not enough difference between a Conquest and your MU-2. You have the airplane buying bug or what is better known as Jet Fever!
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 11:26 |
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Joined: 12/03/14
Posts: 20742
Post Likes: +26207
Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: There is not enough difference between a Conquest and your MU-2. There is a difference if you want to fly 1600 nm non stop, or carry more than 6 people. The 441 does both very well. If my mission was 1200 nm, 6 people, at the same time, then there's no better plane than my MU2 for the money. Quote: You have the airplane buying bug or what is better known as Jet Fever! The fever exists all the time, the problem is the ability to pay for the treatment. I can pay more for my treatment than I could in the past, plus I need more treatment for my business. Mike C.
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 11:34 |
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Joined: 11/07/11
Posts: 855
Post Likes: +479
Location: KBED, KCRE
Aircraft: Phenom 100
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Username Protected wrote: This seemed more than expected. My passengers had been in other Citations before and found them more tolerable. Was the whine volume the same in every seat? Or specific seats? Chip-
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 11:40 |
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Joined: 12/03/14
Posts: 20742
Post Likes: +26207
Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: Was the whine volume the same in every seat? Or specific seats? It was strong in the passenger cabin in every seat, though the two forward facings seats in the club in the back had it strongest, as one might expect. Roughly the two seats to the left and right of this camera position: Attachment: interior 5.JPG Mike C.
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 13:33 |
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Joined: 12/14/08
Posts: 42
Post Likes: +23
Aircraft: PIlatus PC-12/47
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Not to throw too many curveballs into this interesting thread, but the new tax "reform" bill under consideration in conference committee and likely on the President's desk by Xmas removes SS1031 exchanges except for real estate (figures) assets.
So, all this discussion about upgrades and side-grades is going to have a lot of cold water thrown on it if you are looking at 5 years of depreciation recapture when you trade....
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 13:48 |
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Joined: 12/17/13
Posts: 6652
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Location: Hollywood, Los Angeles, CA
Aircraft: Aerostar Superstar 2
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Username Protected wrote: Not to throw too many curveballs into this interesting thread, but the new tax "reform" bill under consideration in conference committee and likely on the President's desk by Xmas removes SS1031 exchanges except for real estate (figures) assets.
So, all this discussion about upgrades and side-grades is going to have a lot of cold water thrown on it if you are looking at 5 years of depreciation recapture when you trade.... Explain depreciation and how it works now, and how it would work after this if you can? As if to a baby - I'm very slow. 
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 13:51 |
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Joined: 10/05/11
Posts: 10257
Post Likes: +7323
Company: Hausch LLC, rep. Power/mation
Location: Milwaukee, WI (KMKE)
Aircraft: 1963 Debonair B33
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Username Protected wrote: Not to throw too many curveballs into this interesting thread, but the new tax "reform" bill under consideration in conference committee and likely on the President's desk by Xmas removes SS1031 exchanges except for real estate (figures) assets.
So, all this discussion about upgrades and side-grades is going to have a lot of cold water thrown on it if you are looking at 5 years of depreciation recapture when you trade.... How fresh is that piece of news. I heard it was OUT and then back IN pretty quickly.
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 13:55 |
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Joined: 01/01/10
Posts: 3503
Post Likes: +2476
Location: Roseburg, Oregon
Aircraft: Citation Mustang
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Username Protected wrote: The Eclipse is a very quiet jet, a true headset free jet, but even the Mustang, especially for frequent flyers is an everyone should wear headsets kind of plane. Sure wouldn't expose my kids to that level of noise on a regular basis. I disagree with your observation about the Mustang. My passengers never wear headsets and have never asked for them. I've had the sound pressure measured in cruise flight, and it's only 75dB for all six seats. Hardly a level that warrants headsets.
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 14:53 |
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Joined: 12/14/08
Posts: 42
Post Likes: +23
Aircraft: PIlatus PC-12/47
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Username Protected wrote: Not to throw too many curveballs into this interesting thread, but the new tax "reform" bill under consideration in conference committee and likely on the President's desk by Xmas removes SS1031 exchanges except for real estate (figures) assets.
So, all this discussion about upgrades and side-grades is going to have a lot of cold water thrown on it if you are looking at 5 years of depreciation recapture when you trade.... Explain depreciation and how it works now, and how it would work after this if you can? As if to a baby - I'm very slow.
You buy an airplane for business use (complicated to prove, set up and not expose yourself to tort liability - see a specialist attorney/tax advisor). You pay $5mm.
If used (again, subject to strict IRS rules) 100% for business purposes, you can deduct the entire purchase price on a straight line basis over 5 years (i.e., in this example $1mm per year).
Assuming you have at least $1mm in income each year that you can deduct against, you pay no income tax on the $1mm in income (technically it's removed from your "taxable income" - see your 1040 form for that line). Let's say your income tax average rate is 30%. You would be saving $300k in taxes each year under this scenario. There are some additional nuances regarding carry-forwards and deductibility phase-outs, and possibly alternative minimum tax etc. but that's essentially it.
If you sell that asset (the $5mm plane), you must "recapture" the depreciation to the extent of resale price. So, if you sell the original $5mm aircraft for $4mm, you would owe $1.2mm (essentially, it's a bit more complicated than this) to the IRS in that tax year.
The SS1031 exchange provisions let you (again, subject to some transactional rules) buy a "like-kind" asset and not recapture the depreciation to the extent that the new asset is equal or greater in value to the old one.
So, assume you sell your (original) $5mm aircraft and buy a new $8mm aircraft. You pay no recapture and you now get to depreciate the $3mm difference again over the next 5 years.
Under the changed rules (as I currently understand them), these like-kind exchange rules are removed for aircraft (and all other capital assets except real estate). So, sell you $5mm aircraft and pay the IRS back for the depreciation (to extent sale is equal to purchase price). You could then begin depreciation on the $8mm aircraft over 5 years.
It works about to about the same except for timing and time value of money (which can be substantial and/or prohibitive depending on circumstances).
The ultimate game (was) to keep stepping up, then die, leaving a very expensive aircraft to your heirs, who got a "step up" in basis, wiping out the depreciation penalty.
One can argue that these provisions are actually bad policy since planes do not depreciate to -0- in fact in five years. It was/is a special interest tax provision to favor manufacturers of expensive capital equipment (not just planes but also construction equipment, manufacturing machines, etc.).
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 17:08 |
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Joined: 12/03/14
Posts: 20742
Post Likes: +26207
Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: ... the new tax "reform" bill under consideration in conference committee and likely on the President's desk by Xmas removes SS1031 exchanges Like kind exchange isn't a factor for me. First, you have to make the sale and purchase a single contract. While there are places that can handle that, it is complex and costly. Second, that means I don't have two airplanes for a while, and usually the new one isn't ready to go for whatever reason, so that means no flyable airplane. I can't have that happen, so sale of the first plane occurs some time after the purchase of the second. Third, the ownership vehicle for the next plane is probably changing to a separate LLC, and you can't do like kind with two different entities. Quote: So, all this discussion about upgrades and side-grades is going to have a lot of cold water thrown on it if you are looking at 5 years of depreciation recapture when you trade.... Offsetting that is the $510K section 179 expense deduction and a healthy first year depreciation, so it isn't all bad. Mike C.
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Post subject: Re: Best t-prop or jet for $1.3m? Posted: 13 Dec 2017, 17:21 |
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Joined: 12/03/14
Posts: 20742
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Company: Ciholas, Inc
Location: KEHR
Aircraft: C560V
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Username Protected wrote: If used (again, subject to strict IRS rules) 100% for business purposes, you can deduct the entire purchase price on a straight line basis over 5 years (i.e., in this example $1mm per year). Not quite. Aircraft are under 5 year MACRS rules, which is an accelerated schedule versus linear. The schedule is: year 1: 20% year 2: 32% year 3: 19.2% year 4: 11.52% year 5: 11.52% year 6: 5.76% An additional wrinkle is that you can section 179 expense all or a portion of the purchase up to $510K (assuming that allowance is not used elsewhere). So, for example, a $1.5M plane could result in a tax deduction in the first year of $700K, $500K from section 179, and then $200 from 20% of the $1M remainder in depreciation from the 5 year MACRS schedule. Thus the full tax deduction per year is: $1.5M price, $500K section 179: year 1: $700K year 2: $320K year 3: $192K year 4: $115K year 5: $115K year 6: $58K Mike C.
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