Leases and Loan Covenants

If you own a business and have leased equipment, your tax professional has likely asked you for the lease agreements to determine if the lease should be classified as a capital or an operating lease.  This determination is important in determining how the lease will be recorded in your accounting records and the subsequent amounts that may be capitalized or deducted as an expense.  Current proposals may change the way leases are reported and subsequently affect any loan covenants you may have.  Be sure to contact your tax and accounting professional and inquire about this potential change and how it may affect you.
/posted by Vickie Tischendorf, CPA