Depreciation on a lease/purchase?

[SHARP327]

Hi Frank!

While doing our number crunching the question came up about being able to claim depreciation on our D unit that we have a lease/purchase agreement on, we intend on purchasing the truck at the end of the lease.

The lease is a open end lease and we're unable to find anywhere in the IRS publications that define owner, and if we were purchasing the truck through a bank (from what we understand) we'd be able to claim the depreciation deduction.

So can we say that we own the truck while having a lease/purchase agreement, the IRS publication states that you must own the vehicle.

 

[Fkatz]

Hi Sharp327

But according to the IRS there is no way that you can claim depreciation at all on your truck due to the lease/purchase,
BUT YOU CAN TAKE THE LEASE PAYMENTS AS A DEDUCTION. The depreciation will be allowed after you finish and purchase the truck at the time of the byout. Then the depreciation is only on the amount of the buyout not the full price that you paid.

Frank

 

[SHARP327]

Thanks alot Frank!

That helps us out as to what we can claim on our taxes,we kinda figured it would be that way but thought we'd find out for sure!

Thanks again Frank!

 

[Fkatz]

Hi Sharp,

I hope that your are taking all the deductions that you can legally take when you prepare your return. If you would like for me to take a look at them (at no charge) just mail or fax a copy to me

mailing address is Frank's Tax & Business Service
226 S. Cherokee ST
Kings Mountain, NC 28086

or Fax: 1-704-739-3934

Frank