How should tax be calculated on an open-end lease with a defined minimum lease term using the total of the lease payments method?
If a lease is renewable, the sales tax due up front is based on the total amount due during the initial minimum lease term. Then for each subsequent renewal period, the tax is due on the total of the payments during the renewal period. Thus, for a 12- month lease that renews monthly, the tax is calculated based on the total payments through month 12, and then on each monthly payment. If instead of a monthly renewal, the lease renews for an additional 12-month period, then in month 13, the tax is calculated based on the payments for the next 12 months. 32. Most leases are written with a fixed interest rate and, therefore, a fixed periodic payment. In some cases, leases are written with a variable interest rate. In these cases the periodic payments will vary based on changes in their interest rates. For example, a leases periodic payments can vary if the interest rate is tied to a national index such as the prime rate. How should open end leases with a defined minimum lease term that als
Related Questions
- How should tax be calculated on an open-end lease with a defined minimum lease term using the total of the lease payments method?
- Does this rule apply under both the original purchase price method and the total lease payments method?
- How to calculate Net Present Value of the Minimum Lease Payments incl bargain purchase option?
