1. Early exit (before year 5)
Selling or transferring your Pod units before the five-year lock-up is a taxable event. You must recognize any appreciation in your units as capital gain and recapture the aircraft depreciation you previously claimed as ordinary income. In short, early cash-out accelerates taxes and forfeits the program’s built-in deferral. (See Can investors access their funds before the five-year term ends? for mechanics and fees.)
2. Your choice at the five-year mark
When the initial lock-up ends you face two options:
Option | Tax items today | What stays deferred |
Cash redemption | LT capital gain on full appreciation plus aircraft-depreciation recapture as ordinary income | Nothing—deferral ends |
Roll into the next Pod | LT capital gain on the stock sold to reset the fleet | Aircraft-depreciation recapture and any remaining built-in stock gain |
Note: In-kind redemptions (receiving a basket of securities instead of cash) are only offered after the second five-year cycle. You must complete at least two consecutive Pods to unlock that distribution method.
3. How the “reset” works if you roll
Staying invested does not wind the fund down. The Manager simply sells enough stock to cover any decline in jet value and repays outstanding aircraft debt, then re-leverages to purchase newer aircraft for the next cycle. Your capital account rolls forward, you keep tax deferral alive, and you receive a fresh block of flight hours for the new five-year term.
Bottom line
Exit early: instant taxation and lost deferral.
Exit at year 5: take cash (taxable) or roll into the next Pod (continued deferral).
Exit after two Pods: you’ll also have the option of an in-kind stock basket for even longer tax control.
Talk with your CPA before choosing; the best path depends on your liquidity needs, tax bracket, and appetite for continued private-jet access. Our team will help find the best option for you.