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Companies can write off the initial cost of purchasing an airplane, but the law limits depreciation to business trips for those flights. When an executive uses a plane for personal purposes, the company cannot deduct it and the executive is required to report the trip as income on his or her tax return.
“If a personal vacation trip took place on its corporate jet, the company should avoid taking a business deduction,” Werfel said at a press conference Wednesday. “What we believe is happening is that there is not enough robust record-keeping in place and these business deductions are being systematically exaggerated, something that we are not working on. That’s what we’re trying to do.”
The new aviation-focused audit campaign is just one of many steps Mr. Werfel has taken as secretary to tighten oversight of high-income taxpayers and large corporations. Government officials said they could collect hundreds of billions of dollars in tax fraud unless lawmakers stripped the IRS of previously approved funds.
Last year, in a series of articles about how the wealthy avoid taxes, ProPublica featured billionaires using private planes to obtain large tax breaks.
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