Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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L

330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660

Annotation 330.1874

(a) IN GENERAL

330.1874 Assignment of Lease. An owner of property sells it and leases it back in a transaction qualifying as an acquisition sale and leaseback under section 6010.65. That person, now a lessee, assigns the lease to a new sub-lessee. If the leaseback portion of the acquisition sale and leaseback transaction is a true lease (as opposed to a sale at inception), then no tax applies to the rentals paid by the sub-lessee and the assignment is not taxable. However, the exercise of an option to purchase the leased property by the sub-lessee would be subject to tax.

On the other hand, if the leaseback portion is a sale at inception, the assignment of the "lease" is actually a sale of the property to the sub-lessee. As such, the assignment/sale is taxable; however, the "lease" receipts paid by the sub-lessee would not taxable. 2/21/92; 4/1/94.