Signtronix-That would further reduce taxable income
When Signtronix asked to write this article about leasing, it frankly had been a long time since I last worked with the accounting debits and credits of leasing. But, in researching the current Tax Codes against the old Tax Codes that I worked with, I found that the new Tax Codes are even better. Under the old Tax Codes, a business could expense the lease at 100% on the income statement as “Advertising Expense.” That reduces the taxable income and saves the taxpayer businessman about 25% of the value of the asset from being paid in income taxes.
At this point, this gets a bit heavy, but it’s worth paying close attention. After the lease expired, a business could then adjust the “Retained Earnings” and income statement and capitalize the sign on the balance sheet under “Fixed Assets,” i.e., “Sign” at the total value paid by the lease. Then, that business would depreciate 200% of that value back on the income statement as an expense that didn’t even involve cash. That would further reduce taxable income.