Joe Genius of ABC Corporation is considering whether to lease or purchase a large capital asset. If Joe purchases the asset, he will use debt financing. Which of the following accurately describes the similarities in the tax treatment of leasing and purchasing with debt?
A) Both methods allow for a tax deduction.
B) Capital cost allowance is always calculated for both alternatives.
C) Cash payments and tax savings will usually occur simultaneously for both alternatives.
D) Principal payments are deductible for both alternatives.
Correct Answer:
Verified
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