26 USC 4217 - Leases

U.S Code last checked for updates: Nov 22, 2024

§ 4217.

Leases

(a)

Lease considered as sale

(b)

Limitation on tax

(c)

Definition of total tax

For purposes of this section, the term “total tax” means—

(1)

except as provided in paragraph (2), the tax computed on the constructive sale price for such article which would be determined under section 4216(b) if such article were sold at retail on the date of the first lease to which subsection (b) applies; or

(2)

if the first lease to which subsection (b) applies is not the first lease of the article, the tax computed on the fair market value of such article on the date of the first lease to which subsection (b) applies.

Any such computation of tax shall be made at the applicable rate specified in this chapter in effect on the date of the first lease to which subsection (b) applies.

(d)

Special rules

(1)

Lessor must also be engaged in selling

(2)

Sale before total tax becomes payable

If the taxpayer sells an article before the total tax has become payable, then the tax payable on such sale shall be whichever of the following is the smaller:

(A)

the difference between (i) the tax imposed on lease payments under leases of such article to which subsection (b) applies, and (ii) the total tax, or

(B)

a tax computed, at the rate in effect on the date of the sale, on the price for which the article is sold.

For purposes of subparagraph (B), if the sale is at arm’s length, section 4216(b) shall not apply.

(3)

Sale after total tax has become payable

(e)

Leases of automobiles subject to gas guzzler tax

(1)

In general

In the case of the lease of an automobile the sale of which by the manufacturer would be taxable under section 4064, the foregoing provisions of this section shall not apply, but, for purposes of this chapter—

(A)

the first lease of such automobile by the manufacturer shall be considered to be a sale, and

(B)

any lease of such automobile by the manufacturer after the first lease of such automobile shall not be considered to be a sale.

(2)

Payment of tax

In the case of a lease described in paragraph (1)(A)—

(A)

there shall be paid by the manufacturer on each lease payment that portion of the total gas guzzler tax which bears the same ratio to such total gas guzzler tax as such payment bears to the total amount to be paid under such lease,

(B)

if such lease is canceled, or the automobile is sold or otherwise disposed of, before the total gas guzzler tax is payable, there shall be paid by the manufacturer on such cancellation, sale, or disposition the difference between the tax imposed under subparagraph (A) on the lease payments and the total gas guzzler tax, and

(C)

if the automobile is sold or otherwise disposed of after the total gas guzzler tax is payable, no tax shall be imposed under section 4064 on such sale or disposition.

(3)

Definitions

For purposes of this subsection—

(A)

Manufacturer

(B)

Total gas guzzler tax

(Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug. 9, 1955, ch. 677, § 3, 69 Stat. 614; Pub. L. 85–859, title I, § 117(a), Sept. 2, 1958, 72 Stat. 1280; Pub. L. 94–455, title XIX, § 1904 (a)(3), Oct. 4, 1976, 90 Stat. 1811; Pub. L. 95–618, title II, § 201(d), Nov. 9, 1978, 92 Stat. 3184.)

cite as: 26 USC 4217