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Author Topic: TAX  (Read 785 times)

Offline Superbenj

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TAX
« on: July 11, 2013, 09:17:46 AM »
As my base airport is full, not allowing me to grow further, Im currently sitting on a fair bit of wedge, that I am saving to buy a new a/c outright

I suspect you may need more info to give me a solid answer but is it worth me spending the money before the new year to avoid being taxed, or will it be better to hang on to get a bigger discount on the purchase?

Offline Mr.HP

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Re: TAX
« Reply #1 on: July 11, 2013, 09:23:55 AM »
Popular A/C will run out of slots soon if you sit there and wait

Also, I'd not purchase A/C if I'm not sure I'll use them for more than 10 years, as in this era, better planes are coming in one after another

Offline Superbenj

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Re: TAX
« Reply #2 on: July 11, 2013, 09:28:37 AM »
is a 707 a bad bet then? I thought I could fly it profitably for at least 20 years!

Would a number on lease for 7 years be a better bet?

Online knobbygb

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Re: TAX
« Reply #3 on: July 11, 2013, 11:29:25 AM »
Not sure I should be offering advice as we are competing at ORD but....

You can surely fly 707's into the late 1970's but notice the difference in range and performance (fuel burn) on the early model 120s compared to the stuff that comes later (such as 320B) - a huge difference!  If it were me, I'd (maybe) lease 707s now but then replace them after a few years with the better models and buy these outright.  The RR powered 420s are good too - a lot less fuel burn but less range - depends what you will use them for really.

Generally speaking at this stage, the savings you make by spending pre-new year and saving tax (30%) will be more that you will save by bulk ordering.  You'd probably have to buy
30 aircraft outright and pay 100% up front to save more than 30%. Not possible at this stage.
« Last Edit: July 11, 2013, 11:32:36 AM by [SC] knobbygb »

Offline Superbenj

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Re: TAX
« Reply #4 on: July 11, 2013, 11:37:29 AM »
Not sure I should be offering advice as we are competing at ORD but....

You can surely fly 707's into the late 1970's but notice the difference in range and performance (fuel burn) on the early model 120s compared to the stuff that comes later (such as 320B) - a huge difference!  If it were me, I'd (maybe) lease 707s now but then replace them after a few years with the better models and buy these outright.  The RR powered 420s are good too - a lot less fuel burn but less range - depends what you will use them for really.

Generally speaking at this stage, the savings you make by spending pre-new year and saving tax (30%) will be more that you will save by bulk ordering.  You'd probably have to buy
30 aircraft outright and pay 100% up front to save more than 30%. Not possible at this stage.

Cheers! I'll get spending on a couple of 707s on a shortish lease.

As you're significantly bigger than me, I don't think the advice will have a big impact, I shall avoid competing with you in future on one route I may have planned to as means of thanks!

Offline swiftus27

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Re: TAX
« Reply #5 on: July 11, 2013, 12:21:24 PM »
is a 707 a bad bet then? I thought I could fly it profitably for at least 20 years!

Would a number on lease for 7 years be a better bet?

the 707-120 is awful.   If you want them (or DC8-10) shortest term leases to be replaced later by -320s or -50s....

Online knobbygb

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Re: TAX
« Reply #6 on: July 11, 2013, 12:27:44 PM »
Quote
As you're significantly bigger than me, I don't think the advice will have a big impact, I shall avoid competing with you in future on one route I may have planned to as means of thanks!

Actually you should go ahead and compete as much as you can.  You will need to be ultra-ruthless to survive at ORD.  If you don't add flights against me then the others will just add more anyway!  My aim is to put you out of business (all of you if possible, but unlikely), as soon as possible, but within the rules and with a polite smile on my face, so don't take offence.  You can be sure that any advice I give will be genuine too.

Offline Superbenj

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Re: TAX
« Reply #7 on: July 11, 2013, 12:41:53 PM »
OK then, NO SURRENDER!

I've only just started going in on other routes as opposed to taking empty options, so the competition is getting going

I think its going to be hard for any of us to knock others out at the moment, as the slots are just not there to expand.

Will a whole new tranche be dumped into the system at any point, or will it continue to just be a trickle?

Online knobbygb

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Re: TAX
« Reply #8 on: July 11, 2013, 01:11:20 PM »
It's just a trickle and even that will dry up eventually.  Right now it's gone up from 14 to 23 per hour in a little under a year.  Once it gets into the 50's you can expect a new hourly slot maybe once every two years or so.

Offline Superbenj

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Re: TAX
« Reply #9 on: July 11, 2013, 01:39:12 PM »
So ORD is pretty much locked down forever now?!


Offline ezzeqiel

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Re: TAX
« Reply #10 on: July 11, 2013, 01:54:25 PM »
I suspect you may need more info to give me a solid answer but is it worth me spending the money before the new year to avoid being taxed, or will it be better to hang on to get a bigger discount on the purchase?

To answer this question: Yes, it's worth it...

I don't think I ever saw a "big order discount" bigger than 8%, but taxes (In the US), are 30%... there's no comparison...

So i'd prefer spending the money now, than saving it for the "big order discount"


I always try to finish my years even, meaning zero profits... taxes are wasted money...

Offline swiftus27

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Re: TAX
« Reply #11 on: July 11, 2013, 09:51:50 PM »
AWS is not GAAP compliant.   


Online knobbygb

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Re: TAX
« Reply #12 on: July 12, 2013, 02:34:32 PM »
Quote
I don't think I ever saw a "big order discount" bigger than 8%,

Bulk discount increase if you're buying outright as opposed to leasing.  The maximum bulk order discount is 20% for buying 40 or more aircraft. Added to that would be a direct purchase discount of up to 6% if you pay 100% up front.

Your argument still stands thought - spend as much as you can each year to avoid as much tax as possible.

 

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