Massachusetts discusses taxation of sale-leaseback transaction.

Massachusetts held in a letter ruling that a corporation that sold vehicles to a lessor and then leased them back was not subject to sales or use tax. This type of sale-leaseback transaction was found to be a financing agreement. Massachusetts will consider certain factors in making a determination of whether a sale and leaseback transaction will be treated as a nontaxable financing arrangement. These factors include: 1) title and possession remain with the seller-lessee; 2) the seller-lessee retains the benefits and burdens of ownership of the property, such as risk of loss, entitlement to gain, maintenance of insurance, and responsibility for taxes; and 3) the seller-lessee is eligible to claim the federal income tax deductions and credits on the property. (Letter Ruling 99-9, Massachusetts Department of Revenue, 4/1/99) (10/99)