Q. My accountant says there is a limit on the business deductions we can claim for leasing a car. Is this true? A.J.F., Cleveland
A. In effect, yes. Although your business is able to deduct the entire amount of the lease payments, you’re required to add back an “inclusion” amount, based on tables updated by the IRS annually. Thus, it’s like having a limit on deductions for leased vehicles, comparable to the annual “luxury car” limits that apply to vehicles you purchase. Although the add-back amounts are modest, consider them when you weigh the decision to buy or lease a business vehicle.
Tip: The IRS recently issued the new tables for 2013. ( See IRS Revenue Procedure 2013-21.)
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