NAFA member Noah Block, Tax Advisor at Aviation Tax Consultants, shares his latest article about tax mistakes to avoid as a first-time plane buyer.
Purchasing a plane can be an exciting step for a business owner. It can save time, improve access to customers and projects, and create significant tax planning opportunities. However, the tax benefits of aircraft ownership are not automatic.
Many first-time plane buyers have their eyes set on bonus depreciation but overlook the details that determine if they qualify. Before closing on the aircraft, buyers should understand the most common tax mistakes that can create issues later.
1. Buying the Aircraft in the Wrong Entity
One of the first decisions in an aircraft acquisition is determining who or what entity should own the aircraft. Many buyers assume that forming a new LLC to own the plane is always the right answer. While a new LLC is usually created, the member of that LLC is often overlooked.
The structure should consider who will use the aircraft and how the tax deductions will flow through to the taxpayer.
Buying in the wrong entity can create problems with business-use substantiation, passive activity rules, related-party leasing, and the ability to actually use the depreciation deduction.
This article was originally published by Arcadia Jets on August 11, 2026.