Leasing is more likely to be advantageous when the lessor's tax rate is substantially higher than...

Leasing is more likely to be advantageous when the lessor's tax rate is substantially higher than the lessee's.

True or False

Please explain

Expert Solution

The given statement is TRUE as leasing will be more likely to be advantageous when lessor's tax rate is substantially higher than the Lessee, because it will mean that the lessor will be able to claim more of the benefits and he can reduce his overall tax liability because asset is still registered in his name and it will also mean that there will be a higher amount of tax deduction associated with lease obligations and it will also mean that there will be higher taxation involved but there will be a higher amount of tax deductions which can be set off against tax payables.

hence it can be said that leasing is more likely to be advantageous when lessor's tax rate is higher than lessee tax rate.

The given statement is TRUE.

jeff jeffy answered 2 years ago

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