The 4th Quarter

The 4th Quarter Will Be Over, Before We Know It.

Plan Now, Avoid The December Rush

Every year, the fourth quarter arrives with remarkable predictability. And every year, aircraft buyers and sellers seem surprised that December 31 follows December 30. In 2026, that problem is more pronounced because the pre-owned aircraft market is combining healthy demand, reduced inventory of desirable aircraft, maintenance and parts constraints, increasing transaction complexity and significant federal tax incentives for qualifying purchasers. If completing an aircraft acquisition or disposition before year-end matters, "we'll get started in November" may not be a strategy. It may be the beginning of a problem.

The Market Is Tight

Current market data points in the same direction. Sandhills Global reported worldwide used-jet inventory approximately 23% below the prior year, including a nearly 40% decline in large-jet inventory. IADA members reported 746 closed transactions during the first half of 2026, up 21%, while describing historically tight availability of high-quality aircraft. JETNET reported aircraft offered for sale at roughly 6.6% of the operating fleet, still well below longer-term norms.

The practical conclusions are straightforward:

• Good airplanes are not becoming easier to find.

• Late-model, well-maintained aircraft with complete records tend to move quickly.

• Some desirable aircraft trade through off-market networks before ever reaching public listings.

• In a constrained market, preparation and relationships matter.

There may be plenty of airplanes for sale. The real question is whether there are plenty of airplanes you actually want to own.

Fourth Quarter Compresses Everything

Finding the aircraft is only the beginning. A serious acquisition may require an LOI, purchase agreement, escrow, title review, maintenance-records review, pre-purchase inspection, financing, insurance, tax planning, regulatory analysis, ownership structuring, repairs, delivery and FAA filings. All of those pieces need to converge at roughly the same time, and year-end pressure affects inspection facilities, lenders, insurers, escrow companies, technical representatives, attorneys, tax advisers, maintenance providers and regulatory personnel.

A transaction can be delayed by something as ordinary as a lien release, lender condition, missing document, insurance binder, maintenance discrepancy or unavailable signature. December 31 is remarkably unsympathetic to those complications.

A quality pre-purchase inspection is also one of the most important protections available to a buyer and one of the hardest parts of a transaction to responsibly compress. Inspection facilities may be booked, records discrepancies require investigation, maintenance findings must be evaluated, parts may be unavailable, and repairs or test flights may be required. The answer to a December deadline is therefore not to abbreviate diligence; it is to begin earlier. A hastily purchased airplane can remain an expensive mistake long after the tax return has been filed.

Move Quickly, Not Hurriedly

Tight inventory creates an uncomfortable problem: move too slowly and the aircraft may disappear; move too quickly and diligence may suffer. The solution is preparation. Much of the transaction can be organized before the final aircraft is identified:

• Select aviation counsel and tax advisers.

• Establish the proposed ownership and operating structure.

• Determine tax objectives.

• Line up financing and insurance.

• Select a broker or acquisition adviser.

• Identify technical representatives and inspection facilities.

• Establish escrow.

• Determine where and how the aircraft will be operated.

• Address operational-control and sales-and-use-tax issues.

When the right airplane appears, the buyer can then make a prompt decision without making an uninformed one. There is an enormous difference between moving quickly and moving hurriedly.

The Tax Incentive Is Significant — But Closing Is Not Enough

NBAA advises that new and used business aircraft acquired and placed in service on or after January 20, 2025 may qualify for 100% bonus depreciation, assuming all applicable requirements are satisfied. That creates a significant incentive for some purchasers to complete transactions before year-end, but the critical phrase is not merely acquired, it is placed in service.

For federal depreciation purposes, the relevant analysis generally focuses on when qualifying property is ready and available for its specifically assigned function. Signing a bill of sale on December 31 does not necessarily answer that question. A purchaser seeking a 2026 deduction should therefore work backward from having the aircraft genuinely ready and available for business use during 2026.

The important questions include:

• Who will own the aircraft?

• How will it be operated and actually used?

• When will it be ready for that use?

• What records will substantiate those facts?

A ceremonial year-end flight is not a substitute for genuine operational readiness, and tax planning does not end at closing. Qualified business use, personal or entertainment use, operational structure and recordkeeping can all affect the intended treatment.

Sellers Need to Prepare Too

Year-end pressure is not limited to buyers. A seller who waits until receiving an acceptable offer before organizing records, reviewing title or addressing known maintenance issues can create avoidable closing delays. Before going under contract, sellers can organize maintenance records, identify missing documents, review title and ownership authority, address known discrepancies, confirm engine and program status, identify liens and prepare payoff documentation.

Preparation can accelerate the transaction and may also affect value. Buyers in a tight market are still discriminating when it comes to pedigree, maintenance status and records.

Closing Is Not the End

Aircraft transactions are inherently multidisciplinary, and the analysis often continues after the wire transfer and FAA filing. Purchasers may still need to address sales and use tax, property tax, registration, customs, operational control, management agreements, dry leasing, Part 91 versus Part 135 use, personal use and continuing substantiation of qualified business use.

A structure that saves tax but violates the Federal Aviation Regulations is not a successful structure. Neither is an FAA-compliant structure that unexpectedly creates a significant state tax liability. Aviation counsel, tax advisers, brokers, technical professionals and operational personnel should therefore be coordinated before the closing becomes urgent.

September Is Not Early

If completing an aircraft transaction during 2026 matters, September is not early. It is prudent. A purchaser entering the fourth quarter may face reduced inventory, off-market competition, limited pre-buy capacity, maintenance and parts constraints, seller leverage, competition for professional resources and a tax deadline that may depend on the aircraft actually being placed in service before year-end.

That combination should encourage action, not panic, abbreviated diligence or buying the wrong airplane because the calendar says December 22. The objective is to assemble the team, resolve structural issues, understand the market and create enough runway to make a good decision.

Business aircraft routinely fly at 450 or 500 knots. Aircraft transactions do not. Neither do inspection facilities, parts suppliers, lenders, escrow companies, insurers, lawyers, accountants, FAA filings or the Internal Revenue Service.

So if a 2026 acquisition or disposition matters, the goal should not be to see how close to December 31 you can get. The goal should be to create enough time that December 31 becomes almost irrelevant.

Because somewhere, someone planning to begin "after Thanksgiving" will discover the inspection facility is booked, the aircraft they wanted traded privately, the needed part is backordered — and their tax adviser has just asked: "When exactly was the aircraft placed in service?"

At that point, yesterday may suddenly seem like an excellent time to have started.