Linz hotel roomsYou may either enter into a new lease with the lessor of theproperty or get an existing lease from another lessee. Very often whenyou get an existing lease from another lessee, besides paying the renton the lease, you must pay the previous lessee money to get the lease. If you get an existing lease on property or equipment for yourbusiness, you must amortize any amount you pay to get that lease overthe remaining term of the lease. For example, if you pay $10,000 toget a lease and there are 10 years remaining on the lease with nooption to renew, you can deduct $1,000 each year. The cost of getting a lease is not subject to the amortizationrules that apply to section 197 intangibles discussed in chapter 12. Option to renew.The term of the lease for amortization includes all renewal optionsif less than 75% of the cost of getting the lease is for the termremaining on the purchase date. Treat as renewal options any periodfor which the lessee and lessor reasonably expect the lease to berenewed. In determining the term of the lease remaining on thepurchase date, do not include any period for which the lessee maychoose to renew, extend, or continue the lease. Allocate the leasecost to the original term and any option term based on the facts andcircumstances. Make the allocation using a present value computation.For more information, see section 1.178-1(b)(5) of theregulations. Example 1.You paid $10,000 to get a lease with 20 years remaining on it andtwo options to renew for 5 years each. Of this cost, you paid $7,000for the original lease and $3,000 for the renewal options. Because$7,000 is less than 75% of the total cost of the lease of $10,000 (or$7,500), you must amortize the $10,000 over 30 years. That is theremaining life of your present lease plus the periods for renewal. Example 2.Assume the same facts as in Example 1, except that the amount thatapplies to the original lease is $8,000. You can amortize the entire$10,000 over the 20-year remaining life of the original lease. The$8,000 cost of getting the original lease was not less than 75% of thetotal cost of the lease (or $7,500). ERROR MSGCost of a modification agreement.You may have to pay an additional "rent" amount over part ofthe lease period to change certain provisions in your lease. You mustcapitalize these payments and amortize them over the remaining periodof the lease. You cannot deduct the payments as additional rent, evenif they are described as rent in the agreement. Example.You are a calendar year taxpayer and sign a 20-year lease to rentpart of a building starting on January 1. However, before you occupyit, you decide that you really need less space. The lessor agrees toreduce your rent from $7,000 to $6,000 per year and to release theexcess space from the original lease. In exchange, you agree to pay anadditional rent amount of $3,000, payable in 60 monthly installmentsof $50 each. You must capitalize the $3,000 and amortize it over the 20-yearterm of the lease. Your amortization deduction each year will be $150($3,000 20). You cannot deduct the $600 (12 $50) thatyou will pay during each of the first 5 years as rent. hotel search Eger countryCommissions, bonuses, and fees.Commissions, bonuses, fees, and other amounts that you pay to get alease on property you use in your business are capital costs. You mustamortize these costs over the term of the lease. ERROR MSGLoss on merchandise and fixtures.strategies for black jackIf you sell at a loss merchandise and fixtures that you boughtsolely to get a lease, the loss is a cost of getting the lease. Youmust capitalize the loss and amortize it over the remaining term ofthe lease. | 
