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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.3161
(a) In General
330.3161 Related Entities. Company A proposes to lease vehicles which it purchases ex-tax to a related corporation B. B in turn will lease the vehicles to third parties. A proposes to report tax on its rentals to B, thus making B's rentals nontaxable.
The rental agreement between A and B will be recognized as a valid lease provided that the lease is at a price calculated not only to return the wholesale cost but also at least to cover the ordinary and necessary business expenses from the transaction. 8/25/86.