Rent Or Lease

[Unregistered]

Does Anyone Have Any Good Reason To Give A Client To Lease Instead Of Buy?
Thanks,
Ja

[jainen]

Lease or rent what?

Lease or rent what? What sort of entity is the client, and what are they going to do with whatever they are acquiring, and over what time period, and what terms are being offered for the two transactions, and are they asking for tax advice or some other planning issue?

[Jiggers]

Lease or Rent?

Similar thing isn't it. Shouldn't it be Lease or Buy?

Need more information. Are you talking about building, vehicle, equipment, what?

Also, what is the financial position of your client? That has to be considered also.

And, depending on what you are looking at, you have to look at the tax implications and does the taxpayer need immediate write-off now, or over time.

[Unregistered]

Lease Or Buy - Equipment

Landscaper Has Good Business And Has A Lease With Buy Option Of $1.00 At The End Of The Lease

Since He Would Write It All Off Either Way, Looks Like The Decision Would Be Whether He Wants A 3 Or 5 Yr Write Off Or 179
Lease Is 3 Years 10%
Buy Is 5 Years 10%

[Joe Btfsplk]

Lease or Buy?

There is a Lease/buy formula that can be used to calculate it which involves using an interest rate for the time value of money. I studied it for the CPA test, but have long since forgotten all the factors involved.

One important consideration is the period of time the equipment will last. If you keep it for several years longer than the depreciable life, buying would probably be better. If you trade it in for a new model frequently, the decision would be based on some sort of discounted cash flow calculation.

[jainen]

Lease With Buy Option Of $1.00

>>A Lease With Buy Option Of $1.00<<

Because this is a financing arrangement rather than a true lease, it is treated as a purchase. It is eligible for Section 179 but not a 3-year write-off.

[veritas]

I would find out the true cost of the equipment. Once you have that and the terms of the lease you can compute the interest factor. Usually you get ripped on these type of leases.

[rosieea]

Try TaxTools

If you have access to TaxTools, the software has a couple of worksheets to help resolve the buy vs. lease question.

[Black Bart]

Freudian Factor

Does Anyone Have Any Good Reason To Give A Client To Lease Instead Of Buy?

The psychological approach, also known as "do what they want to do," is required in such situations.

Client: The coffee shop boys are saying that it's a whole lot better to lease than to buy nowadays. Whatcha think?
BB: Well, there are several different technical aspects about it which I won't go into now, but what do you think?
Client: Well, I really like the idea. I'll know exactly how much expense I'm getting off -- it's 12 times the payment instead of that deepreeskating that I cain't figure out. They all say that their accountants recommend it, everybody's doing it now (implied: the appearance of trendiness is vital), you'll save lots of money, and it's absolutely the best way to go.
BB: All good points -- just wanted to see if you had been well-informed; so the answer is yes, it would definitely be a good idea for you to lease.
Client: Good! I'm glad you agree. It's nice to know you're keepin' up-to-date with all this new high-powered stuff.
BB:
Client: Okay, I'm goin' back and tell 'em I'm leasin' too. By the way, one of 'em heard the government will match your lease payments dollar for dollar and give you credit off your taxes for it. Is that right?
BB: I'll research that and get back to you.

[Joe Btfsplk]

By the way, one of 'em heard the government will match your lease payments dollar for dollar and give you credit off your taxes for it. Is that right?
BB: I'll research that and get back to you.

That's the best tax tip I've heard of lately. I'll make sure all of my clients lease everything and get those matching funds. I looked up the regulation covering it. It is covered by the 401K Leasing rule.

[BOB W]

Ha Ha....

... you guys are funny. But "unregistered" may get confused.

We had this discussion several weeks ago. A lease with a $1 buy back is treated like a purchase/finance for tax purposes because it doesn't satisfy the 10% or greater buy out rule.

[jainen]

Be careful

>>I'll make sure all of my clients lease everything and get those matching funds.<<

Be careful about this. Since it is not a refundable credit, taxpayers who have already used every other screwball idea out there won't actually get anything back.

[veritas]

Have you heard this one before?

Client calls up yesterday and says he wants to form an "LLC" I been reading about.

v "What for"

Client "We are going to start a construction business"

v "What kind of construction"

Client "Well ya know heating and airconditioning"

v "Are you going to be partners with someone"

Client "Well yeah my brother. Actually I have been helping my brother for about 15 years"

v ? I'm thinking you know what.

Client "I won't be taking any money out so if I form an LLC it won't add to my personal income" He's a fireman in case you haven't caught on yet.

v "If you form an LLC as a partnership you will have income even if you don't take anything from the business assuming it makes money"

Client "Well I don't want it to add to my personal income so I won't be taking anything out.

v I repeat what i stated earlier. This is when they ignore what you say and repeat what they want to hear 10 times.

Client" Well you know we wont make any money because we will buy lotsa tools . You know thats what we want to be in business for"

[Matt Sova]

Answered his own question

Based on the how our Unregistered Guest typed out his question I am thinking he wants to recommend purchasing all equipment or doing capital leases as opposed to true leases. Now some of you are saying "come on Sova how can you tell from his question that that is the case"

Easy, He Obviously Likes To Capitalize Everything!!!!!!!!!!!!!!

[Bees Knees]

Ooooooooooohhhh....

As the groan meter goes off the scale....