A worked exampleThe airplane write-off, with the part nobody mentions.
You buy a $150,000 airplane and put it on leaseback with a flight school. For aircraft acquired after January 19, 2025, 100% bonus depreciation is back, and permanent under current law, so the pitch is simple: deduct the whole thing in year one.
The deduction is real. The problem is what you can use it against.
For most leaseback owners, the airplane is a passive activity under §469. Either it’s a rental activity, which is passive no matter how many hours you put in, or it’s a business you don’t materially participate in, which ends up in the same place. Passive losses offset passive income. If your income is wages, or a business you actively run, there’s nothing there to offset. So the deduction doesn’t disappear. It sits suspended, sometimes for years, until you have passive income to use it against or you sell the airplane.
Then there’s §280F, the tax code’s extra rules for airplanes, cars and other things people use partly for fun. Business use has to be more than half of the airplane’s total use in the first year to get bonus depreciation at all, and leasing it to your own company or a relative generally doesn’t count as business use (airplanes get a narrow exception). Fall to half or below in a later year and you switch to slow, straight-line depreciation and give back the extra you already took, as ordinary income.
None of this makes a leaseback a bad idea. It makes it a structuring question with a right answer and several expensive wrong ones, and the answer depends on facts that exist before you sign.
General information using current law, simplified. Your facts change the answer.
The leaseback problem