Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 335.0925

335.0925 Lease Deposits or Advance Payments on Mobile Transportation Equipment. In setting up a lease of mobile transportation equipment with a customer, a company requires the first month's rental in advance and may also require the last month or last few month's rental in advance. The entire amount of the "advance rentals" or "deposits" would be put into the advance payments section of the lease receivable. When the payment was due from the lessee, the amount is applied to meet the rental payment.

The company, as the lessor of mobile transportation equipment, must pay use tax on the leasing of the equipment. The tax will not be due until the equipment is used. The advance payments should not be considered as part of the fair rental value of the first month's use, but rather should be taxed in the months when they are applied to meet the rental payment. 8/4/80.