On March 1, 2019, Sofia entered into a three-year lease of an automobile used exclusively in her business. The automobile's FMV was $60,500 at the inception of the lease. Sofia made ten monthly lease payments of $725 each during 2019. 3 (Click the icon to view the Lease Inclusion Dollar Amounts for Automobiles with a Lease Beginning Calendar Year 2019.) Is Sofia able to avoid the luxury automobile restrictions on depreciation by leasing instead of purchasing the automobile? Explain. (Do not round intermediary calculations. Round your answer to the nearest whole dollar.) Sofia may O A. No. Sofia may deduct the automobile lease payments made during the year. However, she must reduce the deduction by a "lease inclusion amount" found in the given table published by the IRS. This reduction prevents Sofia from avoiding the luxury auto depreciation limits that apply to purchased vehicles. B. Yes. By leasing the automobile instead of purchasing, Sofia is able to avoid the luxury automobile restrictions on depreciation. Since the automobile was not purchased at the beginning of the year, deduct half of the automobile lease payments made during the year. O C. No. Since the automobile was not purchased at the beginning of the year, Sofia may deduct half of the automobile lease payments made during the year. However, she must reduce the deduction by a "lease inclusion amount" found in the given table published by the IRS. This reduction prevents Sofia from avoiding the luxury auto depreciation limits that apply to purchased vehicles. D. Yes. By leasing the automobile instead of purchasing, Sofia is able to avoid the luxury automobile restrictions on depreciation. Sofia may deduct all of the automobile lease payments made during the year. Sofia's lease payment deduction for 2019 is | Reference Lease Inclusion Dollar Amounts for Vehicles With a Lease Term Beginning in Calendar Year 2018 REV. PROC. 2018-** TABLE 4 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2018 Fair Market Value of Passenger Automobile Over Not Over Tax Year During Lease 2nd 3rd 1st 4th 5th and Later 1 3 5 5 6 4 9 13 16 15 7 10 12 15 21 27 $50,000 51,000 52,000 53,000 54,000 55,000 56,000 57,000 58,000 59,000 60,000 19 31 44 56 27 37 48 $51,000 52,000 53,000 54,000 55,000 56,000 57,000 58,000 59,000 60,000 62,000 22 31 40 49 58 33 59 68 18 39 69 81 20 45 67 80 93 105 23 51 76 91 57 85 101 117 26 30 66 98 118 135 Print Done On March 1, 2019, Sofia entered into a three-year lease of an automobile used exclusively in her business. The automobile's FMV was $60,500 at the inception of the lease. Sofia made ten monthly lease payments of $725 each during 2019. 3 (Click the icon to view the Lease Inclusion Dollar Amounts for Automobiles with a Lease Beginning Calendar Year 2019.) Is Sofia able to avoid the luxury automobile restrictions on depreciation by leasing instead of purchasing the automobile? Explain. (Do not round intermediary calculations. Round your answer to the nearest whole dollar.) Sofia may O A. No. Sofia may deduct the automobile lease payments made during the year. However, she must reduce the deduction by a "lease inclusion amount" found in the given table published by the IRS. This reduction prevents Sofia from avoiding the luxury auto depreciation limits that apply to purchased vehicles. B. Yes. By leasing the automobile instead of purchasing, Sofia is able to avoid the luxury automobile restrictions on depreciation. Since the automobile was not purchased at the beginning of the year, deduct half of the automobile lease payments made during the year. O C. No. Since the automobile was not purchased at the beginning of the year, Sofia may deduct half of the automobile lease payments made during the year. However, she must reduce the deduction by a "lease inclusion amount" found in the given table published by the IRS. This reduction prevents Sofia from avoiding the luxury auto depreciation limits that apply to purchased vehicles. D. Yes. By leasing the automobile instead of purchasing, Sofia is able to avoid the luxury automobile restrictions on depreciation. Sofia may deduct all of the automobile lease payments made during the year. Sofia's lease payment deduction for 2019 is | Reference Lease Inclusion Dollar Amounts for Vehicles With a Lease Term Beginning in Calendar Year 2018 REV. PROC. 2018-** TABLE 4 DOLLAR AMOUNTS FOR PASSENGER AUTOMOBILES WITH A LEASE TERM BEGINNING IN CALENDAR YEAR 2018 Fair Market Value of Passenger Automobile Over Not Over Tax Year During Lease 2nd 3rd 1st 4th 5th and Later 1 3 5 5 6 4 9 13 16 15 7 10 12 15 21 27 $50,000 51,000 52,000 53,000 54,000 55,000 56,000 57,000 58,000 59,000 60,000 19 31 44 56 27 37 48 $51,000 52,000 53,000 54,000 55,000 56,000 57,000 58,000 59,000 60,000 62,000 22 31 40 49 58 33 59 68 18 39 69 81 20 45 67 80 93 105 23 51 76 91 57 85 101 117 26 30 66 98 118 135 Print Done