Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.1875 Equipment Leasing. Corporation A acquires the equipment it will rent from its out-of-state sister organization, Corporation B, and subleases the equipment to its lessees. Corporation A pays Corporation B a rental fee based on a percentage of the rentals received by Corporation A. The timely payment of use tax measured by rentals payable to Corporation B would mean that the sublease of the leased equipment would not be a continuing sale and would not be subject to use tax. Since the corporations are related parties, further analysis is required to determine if the lease is an arms length transaction. If the rentals payable under that lease covers all costs of the lessor with respect to that lease, it is generally regarded as being entered into as if at arms length and considered the same as a lease between unrelated parties. 7/8/92.