You may think that you just bought a new vehicle. Or that you leased a vehicle from your local dealer. But you better be sure that the IRS agrees with you.
You see, if the IRS finds that your lease is not technically a “true lease,” or that your purchase is not technically a purchase, you could owe additional taxes and big penalties.
Don’t fall into this all-too-common trap. You’ll get the facts (and stay out of trouble!) when you read my new article titled Tax Tips: Trap to Avoid: Leasing When You Thought You Were Buying—or Vice Versa.
Three ways our fact-filled article can help you:
- You’ll learn why getting the transaction right is so important. For starters, a lot of money is at stake because leases and purchases often have significantly different tax consequences. If it turns out you don’t have a “true lease,” the IRS will deem it a “purchase” and keep you from claiming the rent payments as business deductions under IRC Section 162(a)(3). You’ll get the whole story when you read the full article.
- We’ll explain what a “true lease” really is and help you spot IRS red flags. A “true lease” is one in which you pay to use the vehicle and not simply obtain ownership of it. There are five red flags the IRS looks for when determining if a lease is really a sale in disguise. We’ll tell you what these red flags are when you read the full article.
- We’ll explain the difference between closed-end and open-end leases. This is an important distinction that you need to understand before you lease your next vehicle. You’ll get all the facts when you read the full article.