Off balance sheet financing not taxable as a lease
An assessment for sales tax on "lease payments" was set aside by a circuit court with respect to a sale and lease back of a building and property between a bank and a partnership created by stockholders and officers of the bank. It was anticipated that the sole purpose of the transaction, a form of off-balance sheet financing, was to improve the capital structure of the bank. The court determined that the transaction was a mortgage, not a lease of real property, and that the Department's assessment of tax on such payments was "illegal, improper and unauthorized." Layfayette Leasing Company v. Department of Revenue, Case No. 97-19-CA (14th Cir. November 2, 1998). The decision was affirmed by the First District Court of Appeal.
Posted: 1999-12-03 00:00:00.0
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