Inclusion Amount

AAA

DEFINITION of 'Inclusion Amount'

An additional amount of income that a taxpayer may have to report as a result of leasing a vehicle or other property for business purposes. The inclusion amount must be reported if the fair market value of the leased vehicle exceeds a certain threshold.

The inclusion amount is designed to limit the taxpayer's deduction amount to the amount that would be deductible as depreciation if the taxpayer owned the vehicle or equipment. This prevents the taxpayer from being able to deduct the entire amount of the larger lease payment versus the lesser amount of the depreciation.

INVESTOPEDIA EXPLAINS 'Inclusion Amount'

The inclusion amount will differ according to the type of property or equipment that is leased; the inclusion amount for cars is different than the rate applied to office equipment or computers. Car leases require that an inclusion amount be included for every year that a vehicle is leased, while other property needs an inclusion amount only if the business usage drops to 50% or less during the year.

RELATED TERMS
  1. Reversal Amount

    The amount of price movement required to shift a chart to the ...
  2. Principal

    1. The amount borrowed or the amount still owed on a loan, separate ...
  3. Maximum Loan Amount

    Describes the maximum amount that a borrower can borrow. The ...
  4. Proof of Charitable Contributions ...

    Substantiation required by the Internal Revenue Service for a ...
  5. Quid Pro Quo Contribution

    A charitable donation for which the donor receives something ...
  6. The Smith Maneuver

    A strategy that makes interest on a residential mortgage tax-deductible ...
Related Articles
  1. Bonds & Fixed Income

    Accounting Rules Could Roil The Markets

  2. Fundamental Analysis

    Understanding Pro-Forma Earnings

  3. Investing

    Off-Balance-Sheet Entities: An Introduction

  4. Markets

    Operating Cash Flow: Better Than Net ...

Hot Definitions
  1. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  2. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  3. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  4. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  5. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center