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. Accounting Rules Could Roil The Markets
    Bonds & Fixed Income

    Accounting Rules Could Roil The Markets

  2. Understanding Pro-Forma Earnings
    Fundamental Analysis

    Understanding Pro-Forma Earnings

  3. Off-Balance-Sheet Entities: An Introduction
    Investing

    Off-Balance-Sheet Entities: An Introduction

  4. Operating Cash Flow: Better Than Net ...
    Markets

    Operating Cash Flow: Better Than Net ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center