Equipment Leasing: Benefits and Burdens (Portfolio 545)

cozart_toby_2015

Toby Cozart

Partner

Piedmont Law Partners

At a glance

I. Introduction
II. Substance and Form
III. Lease versus Loan
IV. Lease versus Partnership
V. Related-Party Leases
VI. Lease Versus Service Contract

Abstract

Bloomberg Tax Portfolio, Equipment Leasing: Substance and Form, No. 544, and Equipment Leasing: Benefits and Burdens, No. 545, discuss the factors that must be considered in structuring an equipment leasing arrangement so that it will be treated as a lease for U.S. federal income tax purposes. They discuss the effect on such transactions of economic substance and anti-disavowal doctrines, conduit rules, partnership anti-abuse rules, tax-exempt entity leasing rules, etc.

This Portfolio concerns the substantive transactional requirements that govern the characterization of a transaction involving tangible personal property as a lease, loan, partnership, service contract, etc. It begins with an analysis of the benefits and burdens of ownership that a lessor must acquire for a transaction to be treated as a true lease, apart from business purpose and economic substance.

The Portfolio discusses when a putative loan secured by property should be recharacterized as a lease of the property because of contingent interest or inadequate collateralization. It compares leases to partnerships and discusses partnership leasing structures. In comparing leases and service contracts, this Portfolio addresses transactions in which the service provider owns the property, which are utilized extensively in project financings.

Request pricing

Subscribe to Bloomberg Tax to read the full portfolio. Already a subscriber? Login.

This site is protected by reCAPTCHA and the Google Privacy Policy, and Terms of Service apply.

By submitting my information, I agree to the privacy policy and to be contacted about Bloomberg Industry Group products and services.

Sending...
View all portfolios