On March 1,2010,Lana leases and places in service a passenger automobile.The lease will run for five years and the payments are $900 per month.During 2010,she uses her car 20% for business and 80% for personal activities.Assuming the dollar amount from the IRS table is $233,determine Lana's deduction for the lease payments.
A)$0.
B)$1,800.
C)$2,000.
D)$2,330.
E)None of the above.

Question

Quizplus · Accepted Answer

Lana's deduction is calculated as 20% of the total lease payments for the year minus the IRS inclusion amount. The total lease payments for 2010 are $900 x 10 months = $9,000. The business portion is 20% of $9,000, which is $1,800. The IRS inclusion amount is $233, but since it is less than the business portion, it does not affect the deduction. Thus, the deduction is $1,800.

On March 1,2010,Lana Leases and Places in Service a Passenger