Mary Lou, a cash-basis taxpayer, signs a 12-month lease for $36,000 which starts on May 1, 2020.

a. Assume that she paid the entire $36,000 on the date she signed the lease as required to obtain this rate. Show the calculation for her 2020 deduction.

b. Let's say that prepaying the lease was not required and she paid only the monthly amount the first of each month. Show the calculation of her 2020 deduction.

c. Refer back to the original scenario in part a, and $36,000 was required to be paid up front when the lease commences on 5/1/20. But now the lease is for 24 months instead of 12 months. Show the calculation of Mary Lou's 2020 deduction?

Answer rating: 100% (QA)

SOLUTION a In this scenario Mary Lou paid the entire 36000 on the date she signed the lease to obtai... View the full answer