Appendix C

Auto Leases

Lessors of automobiles having a cost of more than $11,250 had to include in their 1986 income an amount based on tables in Announcement 85-127 that was equal to the value of the limitations imposed by the 1985 law change. For example, a lessee(s) (including an employer or self-employed individual) who leased a car worth $14,300 that was first used on September 1, 1985, and was used 90 percent for business, included approximately $61 in income ($204 times 122/365 of a year times 90 percent business use).

For any passenger automobile leased after April 2, 1985, the inclusion amount is based on the fair market value of the automobile, the lessee’s amount of business use, and the quarter of the taxable year during which the ...

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