A federal deduction does not automatically create an identical California deduction. Date, eligible use, entity and basis must be reviewed before a tax benefit enters the purchase model.
Use current law for the correct year
FTB says California conforms to federal law with modifications and identifies specific areas of nonconformity. Its current guidance reflects an updated reference date under the2025 Conformity Act, but that does not mean every later federal provision is adopted. IRS Publication946 also discusses recent federal changes. Have the preparer identify acquisition date, placed-in-service date, tax year and applicable law before using a depreciation percentage.
Maintain two basis histories
FTB depreciation instructions identify differences involving additional depreciation and asset-expensing elections, among others. Those differences can affect deductions and later basis. Ask for separate federal and California schedules rather than one spreadsheet number labeled tax savings. The schedule should reconcile original cost, capitalized improvements, dispositions and allowable deductions. A difference that matters little in the first year may materially affect the calculation when the aircraft is sold.
Distinguish deduction from available cash
A tax deduction is not a lender deposit or a guaranteed refund. Actual economic benefit depends on the taxpayer, eligible use, income, limitations and timing. The loan still requires its scheduled payments even if the expected deduction is delayed or unavailable. Build a pre-tax ownership cash-flow case first, then add only adviser-supported tax assumptions in a separately identified scenario. Do not count a deduction and its cash benefit twice.
Make the model reviewable
Record who supplied the assumption, for which year, with what conditions and whether continuing use tests apply. If the aircraft mission changes, revisit both schedules. Keep acquisition-tax analysis separate: an income-tax deduction does not establish a sales/use-tax exemption. Have a qualified preparer review each assumption before using an educational example in the purchase model; first-year treatment depends on the taxpayer and transaction.
A practical planning exercise
Illustrative planning: show acquisition and debt cash flows without tax benefits. Add a separate adviser-supplied federal benefit and a separate California adjustment. A zero or blank assumption is preferable to a fabricated universal tax-saving percentage.
Your next-step checklist
- Confirm placed-in-service date.
- Request two basis schedules.
- Model pre-tax cash flow first.
- Revisit changed use.
Sources & further reading
Primary sources support the relevant facts. Our planning questions and illustrative exercises are editorial analysis; they do not replace transaction-specific advice.
- California Conformity to Federal Law · accessed 2026-10-28
- 2025 Form 3885A instructions · accessed 2026-10-28
- Publication 946: How To Depreciate Property · accessed 2026-10-28