Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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495.0000 SALE

Annotation 495.0254


495.0254 Financing Arrangement. A taxpayer is in the financing and leasing business. One of its customers owns several items of tangible personal property which it utilizes in its business. The customer proposes to issue a "Bill of Sale" to the taxpayer transferring all rights, title, and interest to the property to the taxpayer in exchange for a sum of money. Simultaneous with issuance of the "Bill of Sale," the customer and taxpayer will enter into a "Conditional Sales Agreement" whereby the customer agrees to purchase the property from the taxpayer through installment payments with the taxpayer retaining a security interest in the property until all installment payments have been made.

If the customer retains benefit of property ownerships such as state or federal income tax credits and depreciation deductions, the interest rate charged by the taxpayer is nonusurious, and the taxpayer treats the transaction as a loan on its books and files appropriate UCC financing statements, the described transaction is a loan of money and is not a sale of tangible personal property subject to tax. 11/14/85.