Could someone explain when in high tax bracket, should the company capitalize or expense a lease? Why? Thx.
Capitalize. Reduce pre tax income through the depreciation expense.
To add…capitalizing will reduce taxes in early years, and will increase in later years. Total expense and therefore taxes are the same over the life. Early CFO is higher also, but lower later (the same over the life of the lease). Also you don’t “expense” lease ;-), you treat it as operating.