TTR Adds Sale-Leaseback Transaction Tax Answers

Jul 2nd, 2015

(McMinnville, OR, July 2, 2015) - TTR, the leading supplier of tax answers to some of the largest companies in the U.S., has announced the addition of sale-leaseback transaction tax answers to its online library.

TTR subscribers in the banking and finance industry asked TTR for assistance in determining how to tax sale-leaseback transactions. In response, TTR researched sale-leaseback transactions across all states and added tax answers for these transactions to its online library.

A sale-leaseback transaction occurs when (1) a business purchases property, (2) the business then sells the property to a bank (or other entity), and (3) the bank then leases that property back to the business. This generally happens when a business makes a large equipment purchase, decides that the purchase may negatively affect its cash flow, and responds by selling the equipment to a bank or lending institution. The bank then leases the equipment back to the business, which results in the business making smaller monthly payments rather than incurring the entire equipment cost up front.

Previously, banking and finance tax professionals working with sale-leaseback transactions had to determine which portions of the transaction are taxable - the sale to the bank, the leaseback, both, or neither. This task is complicated by the states' varying approaches to taxing sale-leaseback transactions. Some states treat the sale to the bank as a sale for resale and treat the leaseback as a taxable lease. Other states treat both the sale and the leaseback as non-taxable financing agreements. In some states, the taxability depends on whether the leaseback is an operating lease or a capital lease. Other states have special exemptions for sale-leaseback transactions. In states that tax the leaseback portion, how the leaseback is taxed must also be determined - is all tax due at the start of the lease or is tax due with each lease payment?

TTR has solved this problem by fully researching the taxability of each portion of a sale-leaseback transaction across all states, and has now added this new content to its online tax library.