Current through Register Vol. 35, No. 24, December 23, 2024
Section 3.2.208.9 - LEASE VS. LICENSE TO USEA. Receipts of a person who is a lessor of tangible personal property from leasing tangible personal property to a lessee who grants a license to use the leased items of tangible personal property to a third party may not be deducted from gross receipts pursuant to Section 7-9-50 NMSA 1978. However, the deduction will be allowed if the lessor has accepted a nontaxable transaction certificate (nttc) from the buyer in good faith that the property would be used in a nontaxable manner.B. If the lessee delivering the nttc does not use the property in a nontaxable manner, compensating tax is due.C. Example 1: T leases television sets to X, a motel, to place in the rooms of its guests. X delivers an nttc to T pursuant to Section 7-9-50 NMSA 1978. X may not properly deliver an nttc pursuant to Section 7-9-50 NMSA 1978 because it is not subsequently leasing the television sets to its guests in the ordinary course of business; rather, it is granting its guests a license to use the television sets.D. Example 2: X leases bowling equipment to a local bowling alley which in turn grants its customers a license to use that equipment. The local bowling alley may not deliver an nttc to X pursuant to Section 7-9-50 NMSA 1978 because the lease of the equipment is not for subsequent lease.E. Example 3: X is in the business of selling and leasing golf carts. Y, a country club, leases a golf cart from X and permits golfers to use it for a consideration. X's receipts from leasing the golf cart may not be deducted from gross receipts pursuant to Section 7-9-50 NMSA 1978 because Y is not subsequently leasing the golf cart to golfers but is merely granting a license to use the golf cart.N.M. Admin. Code § 3.2.208.9
3/9/72, 11/20/72, 3/20/74, 7/26/76, 6/18/79, 4/7/82, 5/4/84, 4/2/86, 11/26/90, 11/15/96; 3.2.208.9 NMAC - Rn, 3 NMAC 2.50.9 & A, 5/31/01