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 330.3161

(a) IN GENERAL

330.3161 Related Entities. Company A proposes to lease vehicles which it purchases ex-tax to a related corporation B. B in turn will lease the vehicles to third parties. A proposes to report tax on its rentals to B, thus making B's rentals nontaxable.

The rental agreement between A and B will be recognized as a valid lease provided that the lease is at a price calculated not only to return the wholesale cost but also at least to cover the ordinary and necessary business expenses from the transaction. 8/25/86.