Leasing vs buying utility van for our corpration?

Question

we are planning to lease an utility van for the corporation. For tax purpose,Can we capitalized or we have to deduct as rental equipment on profit and loss. And can we deduct the full payment. thanks

Answer 1

If you lease, whatever funds are due on signing can be capitalized and depreciated over the life of the lease.

The monthly payments must be expensed in the month in which they are paid.

If you purchase the entire purchase price can be capitalized and depreciated over the expected life of the van.  If you are making payments on the van rather than paying outright the interest charges are deductible over the life of the payments.  (Ask the lender for a schedule of interest payments so you won't have to calculate them.)

I believe that the legislation which granted individuals the stimulus package included provisions for accelerated depreciation of business equipment.  If you meet the conditions set forth in that legislation you could write off the entire cost (less salvage value) this year.

Hope this helps

Jerry-the-bookkeeper