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Provided by: Lorman Education Services Lease vs. Buy: Choosing the Best Option |
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Training
Provided by Lorman Education Services
nThe decision to finance business equipment through lease programs or by purchases is one of the most difficult and important decisions faced by businesses every day. Making the wrong choice can not only result in economic loss but significant disruption of business, loss of time and opportunity. This teleconference will provide you with a comparison of the benefits and pitfalls of financing business equipment through equipment lease financings and by purchasing. The speakers will approach the issues from several perspectives, including legal, accounting and tax concerns, as well as practical issues. As our speakers have more than 60 years of combined experience in equipment finance, they will be able to present material based not only on their academic qualifications, but on their experience with all types of equipment - from sophisticated technology financings to over-the-road vehicles and the most basic office and manufacturing equipment. The teleconference will define and compare types of leases and other financings, address key accounting and tax issues, and focus on legal and practical concerns. In addition to highlighting principal issues, we'll propose practical solutions and compromises.
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Lease vs. Buy: Choosing the Best Option
Agenda
- Overview: Definition of Leasing and Alternatives
- True Leases vs. Financings
- Operating Leases vs. Capital Leases
- Other Alternatives (Unsecured Borrowing, Cash and Financing With Other Collateral)
- Financial Considerations
- Accounting Issues
- Why Companies Focus on Accounting and Why This Is Changing
- Tools for Creating Operating Leases
- Final Determinant of Whether a Lease Is Capitalized
- Economic Issues - Key Determinants of Whether Lease or Buy Is Better
- Technology and Low-Tech Equipment Have Very Different Effects
- Sales and Use Taxes
- Applicable Federal Tax Rate
- Whether Firm Is in Loss Carry Forward Situation
- Whether Firm Is in Alternative Minimum Tax System
- Effect of Lessee's Borrowing Rate
- Effect of Excess Foreign Tax Credits
- Effect of Residual Value
- End-of-Lease Cost Sensitivity (How Leasing Can Get Trampled)
- Tax Issues
- Need for Deductions and Timing
- Faster Write-Off Through Rent Deduction
- Timing of Deductions
- Net Operating Losses
- Depreciation
- Alternative Minimum Tax Effect
- Depreciation Timing vs. Rental Deductions
- Other Tax Issues
- Eligibility for State Tax Exemption
- Sales Tax
- Property Tax
- Other Financial Issues
- Rate
- Tying Up Credit Lines
- Industrial Revenue Bond Limitations
- United States and Foreign Tax Credits
- Legal Concerns
- Ability to Negotiate Terms in Form Documents
- Flexibility Issues
- Need to Terminate Early (ETO, EBO, Sublease)
- Need to Move Equipment
- Merger or Change of Business Structure
- Risk of Casualty
- Ability to Maintain
- Upgrade and Modifications
- Avoid Problems
- Relationship With Lessor
- Lessor Assignment
- Reliance for Upgrade and Future Service
- Lessor Defaults
- Common "Gotchas"
- Automatic Renewal
- Interim Rent
- Deemed Acceptance
- Contest Rights
- Blanket Tax Indemnities
- Nature of Equipment
- Residual Value and Length of Use
- Effect on Use of Key Items
- Nature of Financing
- Benefit of Vendor Financing Terms
- Better Terms From Bank Leasing Departments
- Mixing of Loans and Leases
XXVIII. Business and Practical Considerations
About The Training Provider: Lorman Education Services
Lorman Education Services - Lorman Education is dedicated to providing cost-effective training opportunities that meet the needs of our members and enhance their skills, knowledge, and competencies.
Please use Priority Code 16175 when registering.
Lorman Education Services began offering continuing education seminars in 1987.
Lorman Education is dedicated to providing cost-effective training opportunities that...
