Capital Lease Asset

[Countingcat]

How do I enter a capital lease asset in TurboTax business?  Do I enter the total cost of the asset? 1120S

[PatriciaV]

If the lease term is less than 12 months, you don't include the asset on your balance sheet. Lease payments are recorded as rental expenses.

However, if the lease runs for more than a year, you report the asset under Business Assets with a corresponding Liability. In this case, rent payments reduce the liability balance, with interest expense recorded separately. The Asset is depreciated as usual.

You can compute the interest expense by multiplying the applicable rate to the outstanding balance of your lease liability. 

[Countingcat]

I have everything in Quickbooks ok. I just was wondering how to list and depreciate it in Turbotax.

[Countingcat]

Here are the details.

Printer total cost is $70,800

Lease term is 60 months

Total payments so far = $3540

Adding the fixed asset at total cost to TurboTax produces a depreciation of $14,160.

Is that ok considering it is well over the amount paid thus far?

[RobertB4444 · Accepted solution]

Yes.  It's amortizing the cost over the five year length of the lease.  So for the last year you'll actually pay more than you'll deduct.  

@Countingcat 

[QandA1]

Can I confirm that in a “Capital lease” for tax purposes the property is treated as an asset for the lease(tenant) and they get to depreciate it on their taxes, and deduct interest on payments. Would they also deduct the property tax paid for the property? Or would the Lessor deduct that? 

and on the lessor's (original owner) side they report only the interest received from the lease? Do they report the rest of the payment received anywhere. And do they get to deduct the interest they have on their original loan for the property?