Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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L

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

Annotation 330.2305.900

(a) IN GENERAL

330.2305.900 Lease Proceeds. The amount shown on the lessor's worksheet as "mandatory purchase price" is regarded as additional gross receipts because the specific language on the worksheet (assumed to agree with contract language) denotes the amount to be an option price, as opposed to an interest or finance charge notwithstanding that the economic substance of the charge may appear to be in the nature of such a charge. This principle applies to both leases that are sales at the inception and true leases on which the lessor timely elected to report tax on cost.

If the contract and the worksheet explicitly provide that the amount is a deferred interest charge, it may represent a deferral of the portion of the yield rate. However, without such contractual provisions, the only conclusion that can be reached is that the charge represents an option price. 1/19/84; 7/10/96.