Dennis Harding is considering acquiring a new automobile that he will use 100% for business in the subsequent year. The purchase price of the automobile would be $64,500. 1 Dennis leased the car for five years, the lease payments would be $875 per month. Dennis will acquire the car on January 1, 2021. It will be his only business asset purchase of 2021. Assume that the inclusion dollar amounts from the IRS table for the next five years are $63, 5140, $208, $251, and $289. Dennis wants to know the effect on his adjusted gross income of purchasing versus leasing the car for the next five years. He does not daim any available additional first-year depreciation Click here to access the limits for certain automobiles. Click here to access the depreciation table to use for this problem. If required, round your answers to the nearest dollar complete the letter to Dennis SWFT, LLP 5191 Natorp Boulevard Mason, OH 45040 December 20, 2020 Mr. Dennis Harding 150 Avenue Memphis, TN 38112 Dear Mc Harding Tom writing in response to your request concerning the tax consequences of purchasing versus teasing an automobile. Our calculations are based on the data you provided in our telephone conversation If the automobile is purchased, the total cost recovery deductions for the five years wil bes Ir the automobile is leased, lease payment deductions will total 22,500 x In addition, you also must include a total 884 X in your gross income Previous Next) Check My Work TAX FILE MEMORANDUM DATE: December 20, 2020 FROM: Ishita J. Jones SUBJECT: Dennis Harding: Calculation of lease versus purchase Facts Dennis Harding is considering purchasing or leasing an automobile on January 1, 2021. The purchase price of the automobile is $64,500. The lease payments for five years would be $875 per month. Dennis wants to know the effect on his adjusted gross income for purchasing versus leasing the automobile for five years. Calculations Purchase: Cost recovery deductions 6,768 x 2021 2022 2023 2024 2025 do 10000 Total cost recovery deductions Ir leased Total lease payments Inclusion dollar amounts Previous