On January l, 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 $30. The annual lease payments are $11,000. What are the tax consequences of this lease?

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The correct answer is D. The deduction for lease payments is $6,582. The inclusion amount is $30, which is multiplied by 60% (the business use percentage) to get $18. The annual lease payments are $11,000, which is multiplied by 60% to get $6,600. The deduction for lease payments is $6,600 - $18 = $6,582.

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