Dick Adams <rdadams[at]smart.net> wrote:

- quote -

If he's in the business of doing something (leasing
equipment, selling the leases), then sales pursuant to that
business are not long term capital gain.

Seth

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

Dick Adams <rdadams[at]smart.net> wrote:

- quote -

He's still a retailer, even for the leases he retains for a
year. I seriously doubt he can claim that he's holding the
leases because he thinks their values will go up in the
future - just the contrary. So I have a hard time with the
thought that anyone would consider them a capital
investment.

Stu

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >

I got a call today and was asked for an off-the-cuff opinion
on this one.

Individual in an S-Corp sells high-end medical equipment on
capital leases. Until now he has been selling the leases to
lenders and taking the profit on the sale as ordinary income.

He is now in a position to lease some equipment and finance
it himself declaring the lease payments as ordinary income
for the first year, then sell the lease to a lender, and
declare the lease sale less his investment as a long-term
capital gain.

My off-the-cuff take on this would be that there's something
wrong here because from a financial reporting point of view,
a capital lease is treated like a sale.

Opinions?

Dick

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2005) - All rights reserved. > << ================================================== ===== >