Referred to as a "tax" or "FMV" leases, these are designed to meet IRS tax guideline definitions of a lease and may offer you the fastest way to "write-off" the use of new equipment. A true lease
can be treated as an operating expense for tax purposes and either as a capital expense or possibly an operating expense for accounting purposes.
This type of lease transfers ownership for a token sum at the end of the lease. Consider this lease choice if you intend to own the equipment at the end of the lease, or if the asset has an
expected long-use-life. A capital/finance lease provides the benefits of ownership with the lessee taking depreciation and interest expenses related to the equipment. At the end of the term, full
ownership of the equipment transfers to the lessee at a cost of typically $1.00
This type of lease can be designed to meet accounting standards for off-balance sheet financing according to FASB (Financial Accounting Standards Board) rules, (to be determined by lessee’s
In this type of lease, a business that has already purchased equipment sells it to the leasing company, which takes ownership of the equipment and then leases it back to the business. It's an
effective way to free up working capital which may be tied up in fixed assets.
A synthetic lease is basically a financing structured to be treated as a lease for accounting purposes, but as a loan for tax purposes. The structure is used by corporations that are seeking
off-balance sheet reporting of their asset based financing, and that can efficiently use the tax benefits of owning the financed asset.