Common Contracts
1 similar Financial Lease Agreement contracts
Financial Leases—How Can They Be Treated for Tax Purposes?Financial Lease Agreement • May 27th, 2009
A lease is an agreement under which the lessor grants to the lessee the right to use an asset for a defined period of time in exchange for a stated rental payment. From an economic point of view, lease agreements can be broadly divided into two types (recognizing that some agreements may fall into a gray area between the two): financial lease (or finance lease) and operating lease. A financial lease is one under which the risks and benefits inherent in the ownership of the asset over its lifetime are transferred to the lessee, while the legal title to the asset remains with the lessor. The agreement may provide for purchase of the property by the lessee upon expiration of the lease term. An operating lease is any lease other than a finance lease, i.e. one where the risks and benefits incident to ownership remain largely with the lessor. A quintessential example of an operating lease is one for a very short term, e.g., one week.
