Which one of the following statements is correct concerning taxes and leasing?
A) Tax reduction is a legitimate reason for leasing.
B) The lessee should be the party with the higher tax bracket.
C) Generally speaking, lessors tend to benefit from leases while lessees do not.
D) If a firm has significant net operating losses, it should be the lessor in a lease.
E) You should only lease an asset if the lease will be fully amortized.

Question

Quizplus · Accepted Answer

Tax reduction is a legitimate reason for leasing as it allows for the lessee to deduct lease payments as a business expense on their tax return, thereby reducing their taxable income.

Note: the other statements are incorrect.

Which One of the Following Statements Is Correct Concerning Taxes