Enter the lease inclusion amount for a vehicle
Per Publication 463, Travel, Entertainment, Gift, and Car Expenses, if you lease a car that you use in your business for a lease term of 30 days or more, you may have to include an inclusion amount in your income for each tax year you lease the car. To do this, you don't add an amount to income. Instead you reduce your deduction for your lease payment. This reduction has an effect similar to the limit on the depreciation deduction you would have on the car if you owned it.)
You can generally use the actual cost method of computing your vehicle expenses. Then, you can deduct each lease payment as a rental expense. However, when business use of a leased vehicle is less than 100%, the rental deduction is scaled down in proportion to the personal use.
Follow these steps to enter information for leased vehicles.
- Select theAssettab in the activity folder.
- SelectAddto add a new asset or change an existing one.
- Enter theDescriptionandDate in service.
- Go to theVehicle/Listedtab and select the property type from theType of propertydropdown.
- SelectForm 4562 Vehicle Questions, answer the questions, then selectOK.
- SelectActual costsand enter any expenses at 100%.
- SelectLease Inclusionto enter information for UltraTax CS to calculate the lease inclusion amount. This option is only available for the following types of property:Luxury auto (Passenger),Van or light truck, andElectric vehicle. If you don't select 1 of these options in theType of propertydropdown, then you'll need to calculate manually the lease inclusion amount and adjust it for the business use percentage.
- Enter any lease payments in theVehicle Rentalsfield.
- SelectDone.noteUltraTax CS automatically generates an Auto Worksheet for each activity, except Form 2106 because Form 2106 already includes the auto information. This worksheet gives an audit trail for the vehicles entered. The worksheet is located in Forms View in the Auto folder.
