Dennis Harding is considering acquiring a new automobile that he will use 100% for business. 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, 2017. It was his only business asset purchase of 2017. The inclusion dollar amounts from the IRS table for the next five years are $59, $128, $191, $228, and $264.

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.

Maloney, Hoffman, Raabe, & Young, CPAs 5191 Natorp Boulevard Mason, OH 45040 December 20, 2016 Mr. Dennis Harding 150 Avenue I Memphis, TN 38112 Dear Mr. Harding: I am writing in response to your request concerning the tax consequences of purchasing versus leasing 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 will be 23,370 X . If the l t22,500 m d you a must automobile is leased, lease payment deductions will total 22,500VIn addition, you also must include a total$ 696 X in your gross income. If you need additional information or clarification of our calculations, please contact us. Sincerely yours, John J. Jones, CPA Partner Maloney, Hoffman, Raabe, & Young, CPAs 5191 Natorp Boulevard Mason, OH 45040 December 20, 2016 Mr. Dennis Harding 150 Avenue I Memphis, TN 38112 Dear Mr. Harding: I am writing in response to your request concerning the tax consequences of purchasing versus leasing 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 will be 23,370 X . If the l t22,500 m d you a must automobile is leased, lease payment deductions will total 22,500VIn addition, you also must include a total$ 696 X in your gross income. If you need additional information or clarification of our calculations, please contact us. Sincerely yours, John J. Jones, CPA Partner