Question

To be able to deduct lease payments, IRS guidelines must be followed. An agreement that meets all IRS requirements to qualify as a genuine lease is called Emma is a lawyer at Leaseonic Corp. She is evaluating the company's current lease agreements. Emma recently hired an intern, Michael, and assigned him the task of listing the provisions for tax guidelines related to lease contracts Emma needs to check and find mistakes in the provisions that Michael listed Which of the following points in the document submitted by Michael are correct? Check all that apply. Leaseonic Corporation mwww Provisions of the Tax Guidelines The lessee has the option of buying the equipment at the expiration of the lease contract at its fair market value At the end of the lease, the remaining useful life of the equipment must be more than or equal to 1 year. The lease agreement can restrict the use of the equipment so that only its lessee or a related party can use the asset after the expiration of the term. The lease term can be extended to an unlimited term using extension and renewals at a fixed rental rate. The residual value of an equipment after expiration of the lease should be at least 20% without adjusting for inflation П П П

Answer 1

option one is correct

Under finance lease

lessee has a option buy the asset at the end of the lease term at fair market value

technically lessee gets option to buy asset less than fair market value

as all other option are not valid

lessee to buy asset at fair value is relatively correct answer