______ would be evidence the lease is being used to avoid taxes and not a legitimate business purpose.
A) Early balloon payments
B) Late balloon payments
C) Capitalizing a lease
D) Transfer of lease payments to a second owner
E) None of these.

Question

Quizplus · Accepted Answer

Early balloon payments are a sign that the lease is being used to avoid taxes. This is because early balloon payments allow the lessee to deduct a large amount of interest expense in the early years of the lease, which reduces the lessee's taxable income.

______ Would Be Evidence the Lease Is Being Used to Avoid