On January l,2019,Grace leases and places into service an automobile with a FMV of $61,000.The business use of the automobile is 60%.The "inclusion amount" for the initial year of the lease from the IRS tables is $46.The annual lease payments are $11,000.What are the tax consequences of this lease?
A)deduction for lease payments of $6,572
B)deduction for lease payments of $6,554
C)deduction for lease payments of $6,600
D)deduction for lease payment of $6,646

Question

Quizplus · Accepted Answer

The "inclusion amount" is the amount of the lease payment that is included in the lessee's income. The inclusion amount is multiplied by the business use percentage to determine the deductible portion of the lease payment. In this case, the inclusion amount is $46 and the business use percentage is 60%, so the deductible portion of the lease payment is $46 x 60% = $27.60. The total deductible lease payment is $11,000 x 60% = $6,600.

On January L,2019,Grace Leases and Places into Service an Automobile