If a lessor has a tax bracket much higher than a lessee's, and the CCA tax shields occur early in the lease, there is little incentive for a lessor and lessee to construct a lease to their mutual after-tax benefit.

Question

Quizplus · Accepted Answer

If the tax bracket of the lessor is higher, it would actually provide an incentive for them to construct a lease to their mutual after-tax benefit, as they would receive a larger tax shield from the CCA deductions.

If a Lessor Has a Tax Bracket Much Higher Than