Congress is back at it again, trying to tinker with the tax code. Unfortunately, they are still trying to change the wrong things (i.e., provisions that don’t help the leasing industry). Sure, all of these changes keep the accountants busy, but the only legislation affecting the leasing industry over the past several years has been negative. How about a shot at real economic stimulation?
Anyway, after an extra long spring break, probably spent on the beach cavorting with coeds, Congress reconvened this week to face what RIA Thompson terms “the same crowded agenda of tax issues that were left unresolved when it broke for the Easter recess.” What does this crowded agenda encompass?
Of general interest to lessors is that both the House and Senate versions provide AMT relief although the approaches are different. Any relief from the AMT will create additional profitability for many lessors. Of specific concern to lessors, however, is our good friend Chuck Grassley’s comment that revenue raisers could be used as a way of paying for part of the reconciliation bill. In other word, not content with having murdered big ticket leasing as it slept, Chuck is on the lookout for other ideas. The Senate, but not the House, is considering making a number of revenue offset changes, including codification of the economic substance doctrine, among others.
The leasing industry has long relied on the ‘soft’ rules of Revenue Ruling 55-540 and Revenue Procedure 01-28 to guide its characterization of transactions as either true leases or conditional sales. These rules are not law and have been open to interpretation. As such, they have helped stimulate lessor investment in tax deals and fostered a creative and responsive industry. What Chuck is proposing, however, is to actually write into law what constitutes a true tax lease. Can you say “chilling effect?”
Isn't it funny how every time there's need for an economical boost the taxes go up? It's like the little people are always responsible for the government's blunders. And the people are supposed to swallow all that and shut up. Nice democracy you're putting up, gentlemen.
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