Leasing: Long-term lease treated as a sale

July 13, 2001
Rose-Michele Nardi
Weiner Brodsky Sidman Kider PC
A couple of months ago, a trucking company approached us about leasing a tractor from us for use in its business. We subsequently purchased a new tractor from a manufacturer tax-free based on an exemption certificate in which we stated we would lease the tractor on a long-term basis. We intended to lease the tractor for a year, but the trucking company instead wants to lease the tractor for nine months with an option to renew for another six months. Would such an arrangement still be considered a “long-term” lease for purposes of our exemption certificate? Would our lease of the tractor be taxable? If yes, how do we compute the amount of tax owed?
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