Question
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
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 $48,500. If Dennis leased the car for five years, the lease payments would be $375 per month. Dennis will acquire the car on January 1, 2018. It will be his only business asset purchase of 2018. The inclusion dollar amounts from the IRS table for the next five years are $60, $130, $194, $232, and $268.
Dennis wants to know the effect on his adjusted gross income of purchasing versus leasing the car for the next five years. He does not claim any available additional first-year depreciation.
If the automobile is purchased, the total cost recovery deductions for the five years will be$ 23,060 X.If the automobile 22,500.In addition, you also must include a total $ is leased, lease payment deductions will total 884V in your gross income Facts Dennis Harding is considering purchasing or leasing an automobile on January 1, 2018. The purchase price of the automobile is $48,500. The lease payments for five years would be $375 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 10,710X 4,900 X 2,950X 1,775 X 1,775 X 22,110X 2018 2019 2020 2021 2022 Total cost recovery deductions If leased: 22,500 Total lease payments 884 Inclusion dollar amountsStep by Step Solution
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