On January L Grace Leases and Places into Service an Automobile

question 34

Multiple Choice

On January l Grace leases and places into service an automobile with a FMV of $39,000.The business use of the automobile is 60%.The "inclusion amount" for the initial year of the lease from the IRS tables is $20.The annual lease payments are $8,000.What are the tax consequences of this lease?

• A)deduction for lease payments of $4,782
• B)deduction for lease payments of $4,800
• C)deduction for lease payments of $6,000
• D)deduction for lease payment of $8,982

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Definitions:

Cash Management

The strategy of collecting, managing, and investing cash in a way that enables the company to meet its financial obligations while maximizing liquidity.

Lockbox System

A lockbox system is a banking service used by companies to expedite the collection and processing of accounts receivable by having checks mailed directly to a bank-operated address.

Collection Time

The average period that it takes for a business to receive payments owed, in terms of receivables, from its customers and clients.

Preauthorized Payments

Financial arrangements allowing a payee to automatically withdraw money from a payer's bank account for recurring bills or subscriptions.