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 330.5250

(e) SALES AND LEASEBACK TRANSACTIONS

330.5250 Sale and Leaseback—Financing Transaction. One of the requirements for sale and leaseback contract to be considered a financing transaction is that the "lease" transaction would be regarded as a sale at inception. This requirement is met where the seller/lessee is required to either purchase the property or to sell it to a third party at the end of the lease term.

The sale at inception requirement is also met if (1) A sells the property to B, (2) B is required to lease the property to C, (3) C is required to sublease the property to A, and (4) at the end of the lease term, A is certain to retain ownership of the property. This requirement is not met, however, if C, not A, is required to purchase the property at the end of the lease term. This requirement is also not met if the agreement between the parties provides that C has the option to elect early termination of the lease, (in which case A must purchase the property) but if C does not elect to terminate early, then C must purchase the property. 2/23/90.