Leased Truck Inclusion

[fuller7378]

I have a taxpayer who is leasing a truck over 6000 lbs. The FMV is $53,500. I know there will need to be an inclusion to reduce his monthly payment. My question is the IRS table that lists the inclusion amounts a monthly number or an annual number. It just seems crazy that a truck with a FMV over $53,000 and a monthly payment of $466 would only be reduced by $31 for the year. It seems more logical that the number($31) would be multiplied by 12 months assuming he purchased it in January. Anybody experienced this?

[Roland Slugg]

The annual "inclusion amount" applies to leased business automobiles with an unladen weight of 6,000 pounds or less and to leased business vans and light trucks with a gross weight (i.e. loaded/GVWR) of 6,000 pounds or less. According to your OP the truck in question weighs more than 6,000 pounds, and if that's true, there is no annual inclusion amount.

Although now moot with respect to your question, the $31 listed in the table is, in fact, the annual inclusion amount, not a monthly one. Kind of hard to believe, isn't it? The inclusion amounts, as well as the annual depreciation limits for automobiles, are published by the IRS in a Rev Proc each year, usually around March. The amounts are based on the average FMVs for vans and light trucks, sort of like a vehicle-specific CPI.

[JohnH]

Who comes up with this stuff? Some team of IRS employees spent weeks devising this, and then additional weeks writing regulations & creating tables to explain it. For what useful purpose?

[fuller7378]

The annual "inclusion amount" applies to leased business automobiles with an unladen weight of 6,000 pounds or less and to leased business vans and light trucks with a gross weight (i.e. loaded/GVWR) of 6,000 pounds or less. According to your OP the truck in question weighs more than 6,000 pounds, and if that's true, there is no annual inclusion amount.

Although now moot with respect to your question, the $31 listed in the table is, in fact, the annual inclusion amount, not a monthly one. Kind of hard to believe, isn't it? The inclusion amounts, as well as the annual depreciation limits for automobiles, are published by the IRS in a Rev Proc each year, usually around March. The amounts are based on the average FMVs for vans and light trucks, sort of like a vehicle-specific CPI.

You are absolutely correct. I forgot about the weight limitation affecting it. Thanks for your comments. It seems like a big waste of time on the inclusion for the amounts they have listed in the table. It also seems like a big incentive for businesses to lease rather than purchase especially when the vehicle weighs less than 6000 lb.