FAA Registry to remain open on December 31 for last minute aircraft transactions
Photo and article via GlobalAir: With business aviation facing demand for new and pre-owned aircraft, and supply not keeping pace, aircraft buyers and sellers need until the last moments of December to close their deals for 2021. But the New Year holiday was set to pull many federal employees out of their offices during the crucial last minutes of the year, creating a time crunch to go along with the supply-and-demand crunch.
As federal employees, the FAA Aircraft Registry staff were set to be off on Friday, Dec. 31 in observation of New Year’s Day.
However, after an effort by the National Business Aviation Association (NBAA) and the General Aviation Manufacturers Association (GAMA), the FAA announced that a limited staff will be available at the Registry office in Oklahoma City on New Year’s Eve.
Earlier this month, the NBAA, GAMA, and other aviation associations brought the issue to FAA leadership with the intent of gaining the additional calendar day for closing on aircraft deals. “Aircraft buyers and sellers are going to need every day of the calendar year to finalize aircraft transactions,” said Scott O’Brien, NBAA senior director of public policy and advocacy. “Considering the value of the aircraft, not being able to complete even a small number of transactions in 2021 has a significant impact on a manufacturer’s bottom line.”
With the supply chain still causing issues for the industry, GAMA reports that some manufacturers have several dozen aircraft slated for delivery in the last week of December.
The FAA and aviation groups reached an agreement to extend the deadline
The associations requested the FAA keep a full staff until 3:30 p.m. on Dec. 30 and maintain a skeleton crew on Dec. 31 to process documents submitted by email and through the public documents room. The FAA has agreed to partially accept both requests.
The NBAA said in a statement that on Dec. 31, the FAA will file stamp documents submitted through the public documents room or by email. However, only documents relating to a transfer of ownership together with any supporting loan or lease documents will be file stamped.
By federal law, the date and time of the filed stamp from the registry is considered the point of perfection, along with international registry registrations when applicable, for buyers, lessors and lenders purchasing and financing an aircraft.
The documents submitted on Dec.31 will not actually be processed by the FAA, meaning parties will not be able to obtain a fly wire, import or export an aircraft, renew an aircraft registration or obtain a unique authorization code for making registrations on the international registry. These tasks will all be completed after the holiday weekend.
For those needing to fly internationally immediately after closing, if closing on Dec. 30 or sooner, and if international registration is required, parties should consider making prospective registrations or obtain a unique authorization code on or before Dec. 30.
We reached out to the FAA, and a representative said the agency did not have any additional details to add to the NBAA statement.
December 31 is the deadline for bonus depreciation on aircraft transactions
For those who are tax-motivated, Dec. 31 is also the deadline for placing aircraft in service to capture 100% bonus depreciation. While having a legal title to the aircraft is the primary requirement to depreciate an asset, signing a purchase agreement, putting down a deposit or even pre-paying for the entire aircraft does not place the aircraft in service.
The key is to make the aircraft available for its assigned function. For example, if the aircraft sits in the hangar, ready for flight but bad weather prevents take off, it can be argued that the aircraft was placed in service. Would it be wise to arrange at least one business flight in December to prove that the aircraft is used for its assigned function? Absolutely.
For those currently buying or selling aircraft, there is still time to both close and receive 100% bonus depreciation before the end of the year.