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Lease Inclusion

This template computes the amount (if any) to be included in gross income under IRC Sec. 280F(c) to offset rental deductions for business use of a leased auto, van, or truck for a term of 30 days or more. The inclusion amount is determined on a calendar year basis under tables published annually by the IRS, based on the FMV of the auto on the first day of the lease term. The inclusion amount is prorated, based on the number of days of the lease term included in a tax year and is adjusted, based on the percentage of business and investment use for that year.

Entering Information

All of the information needed to produce the calculations is entered on the Input worksheet. The yellow highlighted cells are calculated fields, and no data should be entered in these cells.  Gray cells are not calculated fields, but data should not be entered in these cells.

Enter the following information:

  • A description of the vehicle
  • The year the vehicle was placed in service, which must not be later than the balance sheet date
  • If this is the final year of the lease, check the box
  • The name of the employee
  • The FMV of the vehicle at the beginning of the lease term
  • The number of days the vehicle was in service this year. (For this worksheet, a full year is defined as 365 days.)
  • The percentage business use of the vehicle this year.
- Enter as a decimal (e.g., 75% is entered as .75).  Include in this percentage any personal use that was included in the employees' income.

Lease Year Definitions

The current lease year (i.e., the first year of the lease, second year, etc.) is calculated as the difference between the balance sheet date and the year placed in service. The current lease year table goes from one year to five years.  If the actual lease year exceeds five years, then five will be used for the table look-up.