LeaseForce International - Commercial Equipment Leasing, Financing & Consulting Service Provider

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Tax

A monetary government assessment on goods, services, income, etc.

Tax Lease

A lease whereby the lessor recognizes the tax incentives provided by the tax laws for its investment and ownership of equipment. Generally, the lease rate factor on tax leases is reduced to reflect the lessor's recognition of this tax incentive.

Tax Reform Act of 1986 (TRA'86)

The tax law that effected a major overhaul of the US tax system by lowering the MACRS (modified accelerated cost recovery system), repealing the Investment Tax Credit (ITC) and repealing the transitional finance lease.

Term

The length of time a lease agreement will remain in force. The rules of an agreement as supplied on a rental or lease contract between the customer (lessee) and the lessor. The terms of the contract will govern such things as the length of the agreement, rules of proper cancellation of the agreement, renewal terms, and charges for breech of the contract.

Term Sheet

The proposed basic terms and conditions of a potential lease agreement.

Terminal Rental Adjustment Clause (TRAC)

A lessee guaranteed residual value for vehicle leases (automobiles, trucks or trailers), the inclusion of which will not, in and of itself, disqualify the tax lease status of a tax- oriented vehicle lease.

Terms

The provisions of an agreement or contract.

Terms and Conditions

The non-financial provisions of a lease agreement. In a master lease, the terms and conditions are in the main document of the master lease, while the financial provisions are typically detailed within accompanying schedules.

Third-Party Lessor

An independent leasing company, or lessor, that writes leases involving three parties: (1) the unrelated manufacturer or dealer, (2) the independent lessor and (3) the lessee.

Time Value of Money

The difference in spending power between receiving a sum of money today compared to receiving it in the future.

True Lease

1). Another term for a tax or operating lease where, for IRS purposes, the lessor qualifies for the tax benefits of ownership and the lessee is allowed to claim the entire amount of the lease rental as a tax deduction. (2). A type of lease under which ownership of the equipment remains with the lessor. To qualify as a true lease for tax purposes, the Internal Revenue Service states that: (a). Title must remain with the lessor; (b). The rental payments must be competitive with industry rates, represent payment for use of the equipment and have a rate that does not vary appreciably with or without purchase option, (c). The option to purchase price must not be less than the fair market price at the lease's expiration date; (d). Equity cannot be allowed on rental payments. For tax purposes, the total monthly payments can be deducted.