If you lease your equipment instead of purchasing it, you can't depreciate the equipment. However, you will generally be able to deduct the lease payments you make, at the time that you make them, which can result in a larger tax benefit than you'd get if you bought the equipment outright. In some cases, what appears to be a lease might be treated as a sale for tax purposes under IRS rules. To make an informed decision about whether purchasing or leasing will be more advantageous in your particular situation, you need to become aware of the basic rules involved in leasing . If you lease property that is used for both business and personal purposes, you must prorate the lease payments and deduct only the portion of the lease that corresponds to your business use percentage.
Inclusion amounts for listed property.
This extra amount is intended to place you on the same financial footing as someone who has purchased similar equipment and can only deduct the depreciation, which is typically less than your lease payments would be. If you lease a car , you must calculate an inclusion amount for every year you deduct lease payments. If you lease some other type of listed property, you only need to calculate an inclusion amount if your business usage of the property drops to 50 percent or less for a year. The inclusion amount is added to your income only for that year. To calculate your inclusion amount for items other than cars, you need to know the fair market value of the item on the first day of the lease term.