Assuming that the lease is for property used in a trade or business, which of th
ID: 2508133 • Letter: A
Question
Assuming that the lease is for property used in a trade or business, which of the following statements is false? A. If a lessee pays the lessor's expenses, the lessee's payments are additional deductible rent expense to the lessee. B. If a lessee pays the lessor's expenses, the lessee's payments constitute additional rental income to the lessor. C. If a payment is made by a taxpayer as a condition to use, occupy, or acquire equity in property, the payment is normally considered rent expense. D. If a lease requires the lessee to pay the income tax of the lessor attributable to the lessor's rental income from the lease, the income tax paid by the lessee is deductible as additional rent expense by the lessee, however such additional payment will, in turn, increase the lessor's income tax due. E. Both C & D are false.
Explanation / Answer
The below option is false for the lease of a property used in trade or business:
B. If a lessee pays the lessor's expenses, the lessee's payments constitute additional rental income to the lessor.
Hence, the additional expense incurred by the lessee on behalf of lessor is made available to the lessee as deduction