Does this rule apply under both the original purchase price method and the total lease payments method?
• In determining whether the lessee is the owner of property, what is controlling (i.e. GAAP, UCC, tax treatment)? For example, a lessee trades in property subject to a finance lease. Is the tax base reduced if the lessee is considered the owner for GAAP purposes? Since the tax is imposed on the lessee, the trade-in credit is applicable under both calculation methods. However, in both cases, the lessor must disclose the tax base (purchase price or lease payments), as well as the amount of sales tax due, on the paperwork provided to the lessee. As long as the property traded in was originally acquired by the lessee, it does not matter if there is an amount owed to pay off a loan. The trade-in credit is based on the amount of value allowed by the dealer/lessor against the lease. 13. If a lessee pays tax on property based on the original purchase price method, is a subsequent lease of the property (to the same or different person) taxable? How about a subsequent sale of the property? If a
Related Questions
- How should tax be calculated on an open-end lease with a defined minimum lease term using the total of the lease payments method?
- Does this rule apply under both the original purchase price method and the total lease payments method?
- Do monthly lease payments apply toward the purchase price of the home?
