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Depreciation on Lease Car


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My brain is going to mush. Client leases a car, ATX shows depreciation. I didn't think you could depreciate an asset you didn't own--I know you can now use Standard Mileage for lease cars. So, should I just let it go as the ATX says with or override and delete the depreciation deduction.

When I saved and created an efile I got a blue message commenting on depreciation on a leased item.

No wonder I am confused.

Any help is much appreciated.

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I think the leased vehicle parts of the program have problems each year. What I do is enter the vehicle in asset entry, with $0 cost, and put the mileage info in the "vehicles" tab. It seems to be putting the vehicle properly on the listed assets page, with no depreciation. I never e-file business returns, tho, so don't know if they will e-file properly. I recall there is a "standard mileage" switch somewhere, but I never use that either, just actual expenses cuz they are normally much higher. Maybe someone else has a more thorough answer.....

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If the lease is nothing more than a way to finance buying the vehicle at the end of the lease (less than FMV option to purchase), then ATX is correct that you treat the vehicle as a purchase and depreciate it under the same MACRS rules as a purchase.

Thanks. I don't believe this is a way to buy the vehicle at the end of the lease. Hadn't noticed this before. My other clients who are leasing take the info on the 2106 which doesn't include depreciation. Always something new.

I am happy to say I am now finished, except for the automatic extensions and a 1040-X I have to re-do because he just received another change. Such fun. I will think about you all when I am off on the golf course Tuesday.

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