operating lease concept

if the lessor is in a higher marginal tax bracket than the lessee, the lease should be structured as (A) an operating lease (WHY?) (B) a capital lease (WHY?)

a.) Yes, they retain ownership and can you depreciation to lower taxable income b.) No, because they would get taxed on the sale of the equipment @ their high marginal tax rate

Neither, a lease is structured as operating or capital lease if it meets one of the 4 criteria for the lessee and 2 more for the lessor. Now if you mean what is beneficial to the lessor, then I’d say a capital lease. However, an operating lease is better for the lessee

getterdone Wrote: ------------------------------------------------------- a.) Yes, they retain ownership and can use depreciation to lower taxable income b.) No, because they would get taxed on the sale of the equipment @ their high marginal tax rate

Thanks getterdone

getterdone Wrote: ------------------------------------------------------- > getterdone Wrote: > -------------------------------------------------- > ----- > > > a.) Yes, they retain ownership and can use > depreciation to lower taxable income > > b.) No, because they would get taxed on the sale > of the equipment @ their high marginal tax rate Ceteris Paribus, yes you’re right. I agree