D.C. Mun. Regs. tit. 9, r. 9-701

Current through Register Vol. 71, No. 50, December 13, 2024

Rule 9-701 - LEASED TANGIBLE PERSONAL PROPERTY

701.1

Leased tangible personal property is any tangible personal property which is leased, rented, used or otherwise made available to a person other than the owner under a written or unwritten bailment agreement.

701.2

Leases shall be classified as either capital leases or operating leases.

701.3

Capital Leases shall include sales-type leases, direct financing leases and leveraged leases.

701.4

Capital Leases shall be capitalized by the lessee for federal income tax purposes, and shall meet one or more of the following conditions:

(a) Ownership of the tangible personal property is transferred to the lessee at, or before, the end of the lease term;

(b) The lease permits the lessee to purchase the property or renew the lease at a price or rental which is substantially less than the estimated market value or fair rental of the leased property at the time of the option to purchase or renew the lease is exercised;

(c) Some portion of the periodic payments is specifically designated as interest or is otherwise readily recognizable as the equivalent of interest;

(d) The lease term is equal to seventy-five percent (75%) or more of the estimated economic life of the leased property; or

(e) The present value of the minimum lease payments equals or exceeds ninety percent (90%) of the fair market value of the leased property at the inception of the lease.

701.5

Operating Leases shall include all other leases.

701.6

Tangible personal property is deemed to be leased at the time the property is actually in the possession of the lessee under a contract of lease.

701.7

The lessee of tangible personal property covered by a capital lease has the responsibility for reporting the property for taxation and assessment on the return if the leased tangible personal property is physically located in the District of Columbia on the assessment date.

701.8

The lessor of tangible personal property covered by an operating lease has the responsibility for reporting such property for taxation and assessment on the return if the leased tangible personal property is physically located in the District of Columbia on the assessment date. The fact that lessee pays the personal property tax as specified in the operating lease contract does not relieve the lessor's responsibility for reporting the tangible personal property.

701.9

Any tangible personal property which is covered by an operating lease and which is leased to a nonprofit organization or an agency of the federal, state or local government shall be reported for taxation and assessment on the return by the lessor if the leased tangible personal property is physically located in the District of Columbia on the assessment date.

701.10

Any tangible personal property covered by a capital lease which is leased to a nonprofit organization that does not have a personal property tax exemption shall be reported for assessment and taxation on the return by the lessee if the leased tangible personal property is physically located in the District of Columbia on the assessment date.

701.11

Any lessor of tangible personal property covered by a capital lease, who is required to file the return for his or her own tangible personal property, shall report on the return the type of property, lessee's name and complete address, original retail cost, commencement date of the lease and annual rental cost.

701.12

Any lessee of tangible personal property covered by an operating lease, who is required to file the return for his or her own tangible personal property, shall report on the return of the following:

(a) The type of property;

(b) The lessor's name and complete address;

(c) The original retail cost;

(d) The commencement date of the lease; and

(e) The annual rental cost.

701.13

When the leased tangible personal property is taxed to the lessee, it shall be valued at full and true value (original cost), as if the lessee is the owner of the property at the inception of the lease term.

D.C. Mun. Regs. tit. 9, r. 9-701

Final Rulemaking published at 35 DCR 6014, 6016 (August 5, 1988)

Prior to August 5, 1988, the Department of Finance and Revenue published Final Rulemaking notice at 22 DCR 4445 (February 17, 1976).