Glossary of Terms

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Tax Lease

Revenue Procedure 2001-28 (Rev. Proc. 2001-28) establishes criteria for classifying a lease as a true lease for federal income tax purposes. It is the successor to Revenue Procedure 75-21, 1975-1 C.B. 715 and other related revenue procedures. Technically, Rev. Proc. 2001-28 establishes criteria for obtaining an advance ruling from the Internal Revenue Service (IRS) that a lease is a "true lease" as contrasted with a conditional sale. It is also used to determine whether a simple lease between a lessor and a lessee is a "true lease" for tax purposes, which entitles the lessor to take tax benefits arising from the purchase and lease of equipment to the lessee. (Courtesy www.elfaonline.org)

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