Understanding the Tax “True” Lease Rules
The True Lease
If the tax attributes discussed in Chapter 4 for a lease are important to a lessor, then it is important that the contract in fact qualify as a true lease for federal income tax purposes. And, if a lease qualifies as a true lease for tax purposes, your company, as the lessee, can deduct its lease payment as an expense for income tax purposes. If a lease does not qualify as a true lease for income tax purposes, your company is deemed to be the equipment owner for income tax purposes (and can claim the equipment ownership tax benefits); the lessor cannot claim the equipment ownership tax benefits and your company cannot deduct the lease payments as a rent expense.
Taking this another ...
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