08-10-1982 Industrial Development Corporation Board of Directors Meeting

Browse Search

8. Cost to the lessor of personal property leased under a . true lease for federal income tax purposes either from the manufacturer or from a person in the trade or'busi- ness of leasing similar property provided, pursuant to general business practice,. property of this type ordi- narily is the subject of a lease. Treas. Re.g. §1.103- 10(b) (2) (iv) (b),•- LTR 7925037. Eowever, if ,~ c rrin- cipal user of a facility purchases the personal prop- erty within three years of the bond issue, sells it to a leasing company, and re-leases it, a capital expendi- ture was incurred on the occasion of the purchase in the amount thereof regardless of the subsequent sale ~' and re-lease. Rev. Rul. 79-2x8, 1979-3x I.R.B. 5. But see Rev. Rul. 80-162, 1980-25 I.R.B. 5 (no actual pur- chase even though purchase order submitted and down payment made). In addition, expenditures by the ground lessor with respect to the facility on the leased ground are capital expenditures;-but, of course, only if made within three years of the date of the bond issue. LTR 783301x; LTR 7951067; LTR 8011062. 9. Issuance of stock or securities=for property in a tax- _ ~ free incorporation or other exchange under Section 351(x) of the Code. Treas. Reg:~§1.103-10(b)(2)(v)(c). If Section 351(x) applies to a transfer during the 6- year period surrounding the date of issue, and if, with respect to the property transferred, expenditures made within such period would have been Section 103(b)(6}(D) capital expenditures if the transferor and the trans- feree corporation had been related persons for such period, then such expenditures shall be considered to be Section 103(b)(6)(D) capital expenditures made by the transferee corporation. In addition, if a trans- feror and transferee are related persons immediately following such transfer, such transferor and transferee shall also be treated as having been related persons for the portion of such 6-year period preceding the date of such transfer. Treas. Reg. §1.103-10(b)(2) (v)(d). Furthermore, the purchase by the shareholder or security holder of such property is a capital expen- diture if made within the 6-year period. 10. Exchange of consideration for assets in a tax-free re- organization or liquidation which qualifies under Sec- tion 381(x) of the Code (relating to carryover of tax attributes); but the transferor and transferee are treated as related throughout the portion of the six-