Business use of vehicles:
Leased vehicles are not depreciated. Instead, the business portion of the lease payment is deducted. When the value of the leased vehicle is above a certain amount, you must also subtract an "income inclusion" amount from the deductible amount. For vehicles first leased in 2013, the threshold is $18,500. This income inclusion rule is an attempt to equalize the tax benefits from leasing and owning business vehicles.
For example, a vehicle leased in 2013 that is valued at $45,500 and that is used 100% for business would require an income inclusion amount of $16 to be subtracted from the 2013 lease payments in arriving at the deductible amount for that year. In 2014, the income inclusion amount would be $35. Higher income inclusion amounts would apply for 201 through 2017.




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