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How do I properly record lease payments?

Leases can be complicated since they involve a review and analysis of whether the agreement is actually a lease or a conditional sales contract.

To record Lease Payments

  1. If you are positive that the lease or rent is a traditional lease, you can create a Lease Expense account and debit this account for payments.
  2. If your lease is actually a conditional sales contract we strongly encourage you to speak with your accountant. According to the IRS ruling, "payments made under a conditional sales contract are not deductible as rent expense." With the advisement of your CPA, you should decide if you want to show this as an expense on your books.
  3. An additional resource can be found in Chapter 4 of the IRS Publication 535: Business Expenses.

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