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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
L
330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2789
(a) In General
330.2789 Sales at Inception. A lease brokerage firm arranges financing for municipal lessees through various financial institutions. The brokerage firm often acts as lessor on a temporary basis, assigning its rights to the financial institution upon funding of the lease. All of the leases contain interim purchase options and a $1.00 buy-out at the end of the lease term.
A transaction of this type with a $1.00 buy-out at the end of the lease term is a sale at the inception of the lease in accordance with section 6006.3. The retail sale occurs when the property is delivered to the "lessee." The retailer is the entity holding title at the time the property is delivered to the "lessee" and is responsible for payment of the sales tax. Any subsequent assignments to a financial institution would be considered an assignment of intangible rights and thus, not subject to tax. Also, no additional tax is due on the transaction upon the exercise of the buy-out options or termination of the lease. 11/13/86.