1. Can the actual expense method be used with depreciation for 2022? Even though IRS instructions say "standard mileage" should be used for whole leasing period, I read that "lease to buy" is treated differently, and by the time of filing for 2022 this car will be "owned".
there are two types of leases for tax purposes an operating lease and a capital lease. if it's an operating lease you don't own it and therefore you can't depreciate it. if it was a capital lease the entire cost of the vehicle would be eligible for depreciation but because business use was less than 50% the first year section 179 and special depreciation were not available and can not be taken in future years. just because you have the option to purchase at the end of the lease term does not mean it's a capital lease. since you have been treating it as an operating lease, continue.
since you used the standard mileage method the first year, you can change to actual expenses in any future year but once you do you can not change back to the standard mileage method
2. Assuming for 2022 or 2023, the actual expense will be used, how is depreciation calculated, assuming, say 60% business usage?
there is no depreciation included in your expenses but the lease payments are.
3. I read about certain allowances (maximum & special depreciation allowance) but could not understand the difference. Can you explain? Assuming the maximum allowance is used, what year does counting start in terms of maximum since it was a lease. Let's assume for 2023, we start with the actual expense, is it 4th year ($5,760 max)? or 1st year of dep. deduction ($18,100 max)?
4. Can the standard mileage still be used in later years, even when the depreciation deduction is exhausted?
as stated once you use actual expenses you can not switch back
5. How does using it for less than 50% business use for certain years (say 2024 and later) change the calculation for the depreciation?
there is no depreciation to calculate. in fact, the standard mileage rate does include an amount for depreciation
there would be no effect if in 2024 business use dropped below 50% because you were not eligible to take 179 or bonus depreciation or any depreciation (operating lease) in prior years.
