5. Leases and taxes Leasing is a very lucrative source of financing for certain companies' needs, including corporations

[answerhappygod]

5 Leases And Taxes Leasing Is A Very Lucrative Source Of Financing For Certain Companies Needs Including Corporations 1 (124.25 KiB) Viewed 107 times

5. Leases and taxes Leasing is a very lucrative source of financing for certain companies' needs, including corporations and small- to medium-sized businesses. This is because the Internal Revenue Service (IRS) allows the lessee to deduct the lease payments and the lessor can deduct interest payments on any debt used to finance the asset leased. To be able to deduct lease payments, IRS guidelines must be followed. An agreement that meets IRS requirements to qualify as a genuine lease is called Kathy is a lawyer at Leaseonic Corp. She is evaluating the company's current lease agreements. Kathy recently hired an intern, Michael, and assigned him the task of listing the provisions for tax guidelines related to lease contracts. Kathy needs to check and find mistakes in the provisions that Michael listed. Which of the following points in the document submitted by Michael are correct? Leaseonic Corporation Provisions of the Tax Guidelines Check all that apply. The lessee has the option of buying the equipment at the expiration of the lease contract at its fair market value. At the end of the lease, the remaining useful life of the equipment must be more than or equal to 1 year The lease agreement can restrict the use of the equipment so that only its lessee or a related party can use the asset after the expiration of the term. The lease structure should have very high lease payments in the early years and very low thereafter to purely reap tax benefits. The lease term can be extended to an unlimited term using extension and renewals at a fixed rental rate. Prepared by Michael Deora 100 Aplia Way Belmont, CA 55555