Tax Code

The total amount of lease payments under such contract is less than the amount of the redemption price of the leased asset, as compared with the total lease payments, with full cost recovery, the lessor, that is, the inclusion of the redemption price. So, at the end of the lease agreement for the purchase of leased property in the lessee must make an additional payment to lessor in the amount of purchase price. To what consequences will this fact when calculating the profit tax and property tax? In accordance with paragraphs. 10) of paragraph 1 of Article 264 of expenses for tax purposes the lessee are recognized rent (lease) payments are reduced by the amount of depreciation on that property, calculated in accordance with Article 259 of theTax Code. Others including Dr. John Mcdougall, offer their opinions as well. This may occur two ways: 1) for the period the original contract value of the property is fully depreciated, and 2) the original cost depreciated part. In the first case the period of the lease payments in the tax accounting for operating costs through the amortization would be allocated the entire value leased assets, amounting to more than it is included in the lease payments in the amount of purchase price. The other component of the cost of leasing services for this amount will not be refunded. In our opinion, upon payment of the redemption price lessee must include this amount in settlement of the purchase agreement and simultaneously increase the operating costs of the lease agreement for an amount which was not recovered in the lease payments to the other side costs Lessor in connection with the full amortization of equipment..