A person can think that the availability of 100% expensing or bonus depreciation in times of economic expansion is poor policy and a corporate handout without thinking companies shouldn't be able to write off expenses. (I agree "welfare" isn't the most accurate term.)

Bonus depreciation is a fantastic tool to implement in a recession to encourage continued capital expenditures. It's basically a loan from the government to a company (pay less tax today, pay more tax tomorrow). In a recession, it provides a counter cyclical benefit; it costs the government less (as in *most* recessions government interest rates fall), and it benefits companies the most, as in recessions credit spreads are typically highest. Credit spreads are how much above the government's cost of debt a company has to pay to borrow.

Also, one can argue that the politics of including private aircraft in the bucket of assets eligible for bonus depreciation is poor politics, but that's another matter.

A person can think that the availability of 100% expensing or bonus depreciation in times of economic expansion is poor policy and a corporate handout without thinking companies shouldn't be able to write off expenses. (I agree "welfare" isn't the most accurate term.)

Bonus depreciation is a fantastic tool to implement in a recession to encourage continued capital expenditures. It's basically a loan from the government to a company (pay less tax today, pay more tax tomorrow). In a recession, it provides a counter cyclical benefit; it costs the government less (as in *most* recessions government interest rates fall), and it benefits companies the most, as in recessions credit spreads are typically highest. Credit spreads are how much above the government's cost of debt a company has to pay to borrow.

Also, one can argue that the politics of including private aircraft in the bucket of assets eligible for bonus depreciation is poor politics, but that's another matter.

This is completely backwards.

100% depreciation in the year of purchase is correct. You are taxed on the profit you actually made after deducting what you spent. If you buy a $2M drill rig, and bring in $2M revenue, you made $0.

Multi year deprecation is an interest free loan to the government. You pay taxes on profit you didn't actually make, and then in future years, you get to deduct a fraction of that and get a benefit in less valuable future dollars. If you bought a $2M drill rig, and bring in $2M revenue, the government thinks you made a $1.8M profit and taxes you that way. The phantom profit then requires borrowing money to pay off, thus an interest free loan to the government.

For something like real estate with a 39 year depreciation schedule, you only get a net benefit of about 40% of the true cost, so you got taxed on about 60% of the cost which was never profit.

Depreciation is a huge penalty for investing in capital equipment. All expenditures, be them small or large, should be expensed in the year they occur to be totally fair. So 100% bonus depreciation is proper and correct and should apply to everything.

Mike C.

Does anyone have experiance with the g3000 prime? I've got 1000 Nxi in the 910 and love it. Homesafe would be nice to give the passengers a nice warm fuzzy which means 960 or 980, although I do believe there is a retrofit avaliable for the 910s. So what are the differences between regular 3000 and prime? Significant learning curve coming from Nxi? Any magical new features?

We have talked about the epic 1000AX which looks nice on paper but fit and finish doesnt appear on par with the TBM. Also 1000AX has less internal baggage, no external baggage, and I just cant get the image out of my head of someone putting their foor through the window on the airstair.

Here's an interesting comparison between the TBM and VisionJet.

Great comparison!

But the results speak for themselves. You're spending way more money on the Vision and, in return, get something that is worse in almost every respect. You have to do a lot of mental gymnastics to convince yourself, as this owner did, that this is the right thing to do. $1MM lower capex does not justify the cost or capabilities difference.

However you balance capital costs and the capabilities of the aircraft, the big takeaway is the exponential increase in operating expenses as you move from a piston to turbine--prop or jet. Whether you're on a maintenance program or paying out of pocket for inspections, parts, and maintenance, the numbers are impressive, even by Bonanza standards. And then there's insurance for a much higher hull value.

In the piston world, we've often talked about the big jumps in acquisition price, hourly operating costs, and maintenance expenses as you try move from sub-150 knot cruise toward the magic 200 knots or more. But that line, while not quite linear, doesn't slope upward nearly as steeply as at the break between pistons and turbines.

That said, with a SETP like a TBM or a "real" jet like a VisionJet, you also get better dispatch capability and reliability, the comfort of a pressurized cabin, and, depending on your typical flight profiles, big savings in time. What those updates are worth to you is an individual assessment.

Don't disagree Bruce, but I'm looking at this from a different angle. I would say one of the reasons for the nonlinear cost increase is caused by things like this vision plane. It's not a good airplane. It's slow, small, and inefficient. We could have made something just as "good" 50 years ago, minus of course the fancy interior, LED lighting, and overly complicated avionics.

This is where the industry has gone wrong. The cost does not need to increase at such an extreme rate from piston to jet. Look at a jetprop, for example. Or Mike's Citation. What increases the cost is programs that cover pain chips and similar nonsense. And pilots willing to pay for a slow excuse for an airplane rather than demanding true capabilities.

The joke about US Navy planes is that paint is chipping off, etc. But those planes work fine. Imagine if the USN paid for having every paint chip repaired instead of focusing on airplane capabilities. The cost would skyrocket.

The TBM is a much more capable airplane in every regard. Why are people willing to pay any more than 1/2 for a vision? That's the problem. The market is misaligned with the goal of having affordable entry-level turbine airplanes.

This is completely backwards. 100% depreciation in the year of purchase is correct.

Buyers are not purchasing the Vision Jet for it’s capabilities, they are purchasing it for an easy / safe transition from an SR22.

Is sure is an expense. The seller wants his cash.


You can't pay your taxes with a fraction of your asset, the government wants cash.


Those are not assets used in the furtherance of a business, an income producing piece of equipment. They are also not depreciable assets since they don't lose value over time. Your example is basically bogus for business depreciation.

Business equipment costs money and with depreciation, you only get a fraction of its value back, so you end up paying taxes on profits you didn't actually make. For example, you buy a $2M drill rig and your first year you make $2M. Profit was zero. Government says you made almost $2M and you have to find cash to pay them. Then, 15 years later, you finally get the last piece of depreciation, but it is worth only 60% of what it actually cost you when you bought it. You ended up paying taxes on profit you didn't make.

It should be the case that if you buy a business capital asset, you should be able to expense in the year of acquisition. This is fair, since you didn't make the cost of the equipment in profit, and it is fair since you aren't being cheated on the time value of money over a long depreciation schedule.

Mike C.

Mike is right.

But at the end of the day, it’s a carrot and stick game. Our tax code is confusing because it has to be to manipulate a desired outcome.

I use to be in favor of a flat / fair / simple tax, but that’s because I was ignorant of how taxation and depreciation are used to steer business decisions.

The same logic goes to strategic tariffs, but many people don't understand that either.

Did I read the previous post correctly?

Did Chip really say Mike is right or has his account been compromised by scammers?

Nope, you read it right. Mike is a smart guy, sometimes too smart, so I have to give him grief. Mike is actually a really nice guy, he just comes across as harsh and combative on BT.

I’m probably perceived the exact same way by a lot of folks here.

Mike hates it when I bring this up, but he actually called me once, I enjoyed the conversation. He was considering and S/II and I gave him several reasons why he should buy a Citation V instead, and in-spite of my advice, he did anyway!

I think he has made it abundantly clear that he made the right choice.

I think at our core, even though he doesn’t share his, we probably have very different political views. That’s ok, we are just wired differently.

We’re both Citation V’s… I just got the AG138 wiring harness and he got the AG125.

It’s a joke Mike. Don’t look it up, there is no such thing.