Which of the following statements is FALSE?
A)For a lease to be attractive to both the lessee and the lessor,the gains must come from some underlying economic benefits that the leasing arrangement provides.
B)With a true tax lease,the lessor replaces depreciation and interest tax deductions with a deduction for the lease payments.
C)Generally speaking,if the asset's tax depreciation deductions are more rapid than its lease payments,a true tax lease is advantageous if the lessor is in a higher tax bracket than the lessee.
D)A tax gain occurs if the lease shifts the more valuable deductions to the party with the higher tax rate.

Question

Quizplus · Accepted Answer

This statement is false as in a true tax lease, the lessor does not replace depreciation and interest tax deductions with a deduction for the lease payments. Instead, the lessor retains ownership of the asset and takes the tax deductions for depreciation and interest. The lessee makes lease payments that are deductible as a business expense.

Which of the Following Statements Is FALSE