Leased Vehicle

[Normannn]

I have a client who is a realtor who leases a vehicle for the business and business use is 100%. when taking into account the lease you do not take any depreciation deduction into account of the lease only the lease payments minus the Inclusion amount and mileage to see if the standard deduction or actual deductions are higher. thanks for any help Norm Desmarais

[MargaretMort]

That is what I do. My clients use vehicles for personal as well so only the business percentage is included. Had one client who started out taking the Standard deduction, was stuck with that for the time of the lease. This new lease he is keeping better records and taking actual expenses. Standard is quicker and easier for me, Actual is much better for him.

[BHoffman]

Am I doing this correctly?  I have never dealt with a leased vehicle before and this is a new client.

Leased a car and put into service at 01/01/2015.

FMV of leased car is $38,500.  There is no bargain buyout.

Total lease payments made in 2015 were $8,071.  He didn't pay anything in advance.

Business use is 60%

I find the inclusion table for 2015 with that FMV and it says $33

So, is the deduction simply $8,071 - $33 = $8038 x 60% = $4823.  Is that right?

Thanks for your help

 

 

[Roberts]

Yes, that's right. Here is the wording:

 

On January 1, 2015 your business enters into a 3-year lease for an auto with a fair market value of $51,500. Your annual payments are $7,188. For 2015 the business can only deduct $7,137 ($7,188 less $51, from the table above). (For 2015, you can only deduct $7,076, $7,188 less $112.) If the car is used less than 100% for business, you cannot deduct any lease payments related to the nonbusiness portion. But you also reduce the annual inclusion amount by the personal usage. For example, if the car above were used only 70% for business in 2015, you could only deduct $4,996. Prorate amounts for vehicles first leased after January 1 of the year. Note. Most tax preparation software will make the adjustment when you enter the lease inclusion amount for the year.

[BHoffman]

Thanks very much!  I guess sometimes is it just that easy