Section 50 IAC 4.2-15-14 - Present value of personal property leasesAuthority: IC 6-1.1-31-1
Affected: IC 6-1.1-3
Sec. 14.
Pursuant to 50 IAC 4.2-8-7(d), the department has prescribed the following for the computation of the present value of leased personal property:
(1) If ownership of the property is transferred to the lessee (or may transfer if one (1) of the parties exercises an option) at or before the end of the lease, the term of the lease shall be the term used for computation of the present value.(2) If title to the property is not transferred to the lessee, the prescribed federal tax depreciable life of the asset at the inception of the lease shall be the term for computing the present value.(3) If the length of the lease is not specific, the prescribed federal tax depreciable life of the asset at the inception of the lease shall be the term for computing the present value.(4) If the lease contains a "balloon" or "bubble" payment, such payment must be included in the present value computation. A "balloon" or "bubble" payment is a lump sum payment scheduled at the inception of, during, or at the conclusion of the lease.(5) If the lease indicates the rate of interest included in the payments, such rate shall be used for computing the present value.(6) If no interest rate is stated in the lease, the rate to be used in the computation shall be the prime commercial bank loan rate on the January 1 nearest to the inception of the lease. The interest rates to be used for January 1 of certain years will be issued each year by the department.(7) If the amount of any payment or payments (including balloon payments) is not known at the inception of the lease, the present value of the lease payments cannot be computed and therefore may not be used as the base year value for personal property tax reporting purposes.(8) If the present value computed in accordance with this section does not result in a reasonable valuation when other facts and circumstances are considered, the computed present value may not be used as the base year value.Department of Local Government Finance; 50 IAC 4.2-15-14; filed Dec 7, 1988, 9:35 a.m.: 12 IR 906, eff Mar 1, 1989; reinstated by IC 6-1.1-3-22, eff Jul 1, 2003; filed Feb 26, 2010, 2:43 p.m.: 20100324-IR-050090576FRAFiled 11/2/2020, 9:34 a.m.: 20201202-IR-050190636FRA