Internal Revenue Code:Sec. 4217. Leases

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle D - Miscellaneous Excise Taxes
       CHAPTER 32 - MANUFACTURERS EXCISE TAXES
        Subchapter F - Special Provisions Applicable to Manufacturers Tax
      

Statute

    Sec. 4217. Leases
 
    (a) Lease considered as sale
      For purposes of this chapter, the lease of an article (including
    any renewal or any extension of a lease or any subsequent lease of
    such article) by the manufacturer, producer, or importer shall be
    considered a sale of such article.
    (b) Limitation on tax
      In the case of any lease described in subsection (a) of an
    article taxable under this chapter, if the tax under this chapter
    is based on the price for which such articles are sold, there shall
    be paid on each lease payment with respect to such article a
    percentage of such payment equal to the rate of tax in effect on
    the date of such payment, until the total of the tax payments under
    such lease and any prior lease to which this subsection applies
    equals the total tax.
    (c) Definition of total tax
      For purposes of this section, the term ''total tax'' means -
        (1) except as provided in paragraph (2), the tax computed on
      the constructive sale price for such article which would be
      determined under section 4216(b) if such article were sold at
      retail on the date of the first lease to which subsection (b)
      applies; or
        (2) if the first lease to which subsection (b) applies is not
      the first lease of the article, the tax computed on the fair
      market value of such article on the date of the first lease to
      which subsection (b) applies.
    Any such computation of tax shall be made at the applicable rate
    specified in this chapter in effect on the date of the first lease
    to which subsection (b) applies.
    (d) Special rules
      (1) Lessor must also be engaged in selling
        Subsection (b) shall not apply to any lease of an article
      unless at the time of making the lease, or any prior lease of
      such article to which subsection (b) applies, the person making
      the lease or prior lease was also engaged in the business of
      selling in arm's length transactions the same type and model of
      article.
      (2) Sale before total tax becomes payable
        If the taxpayer sells an article before the total tax has
      become payable, then the tax payable on such sale shall be
      whichever of the following is the smaller:
          (A) the difference between (i) the tax imposed on lease
        payments under leases of such article to which subsection (b)
        applies, and (ii) the total tax, or
          (B) a tax computed, at the rate in effect on the date of the
        sale, on the price for which the article is sold.
      For purposes of subparagraph (B), if the sale is at arm's length,
      section 4216(b) shall not apply.
      (3) Sale after total tax has become payable
        If the taxpayer sells an article after the total tax has become
      payable, no tax shall be imposed under this chapter on such sale.
    (e) Leases of automobiles subject to gas guzzler tax
      (1) In general
        In the case of the lease of an automobile the sale of which by
      the manufacturer would be taxable under section 4064, the
      foregoing provisions of this section shall not apply, but, for
      purposes of this chapter -
          (A) the first lease of such automobile by the manufacturer
        shall be considered to be a sale, and
          (B) any lease of such automobile by the manufacturer after
        the first lease of such automobile shall not be considered to
        be a sale.
      (2) Payment of tax
        In the case of a lease described in paragraph (1)(A) -
          (A) there shall be paid by the manufacturer on each lease
        payment that portion of the total gas guzzler tax which bears
        the same ratio to such total gas guzzler tax as such payment
        bears to the total amount to be paid under such lease,
          (B) if such lease is canceled, or the automobile is sold or
        otherwise disposed of, before the total gas guzzler tax is
        payable, there shall be paid by the manufacturer on such
        cancellation, sale, or disposition the difference between the
        tax imposed under subparagraph (A) on the lease payments and
        the total gas guzzler tax, and
          (C) if the automobile is sold or otherwise disposed of after
        the total gas guzzler tax is payable, no tax shall be imposed
        under section 4064 on such sale or disposition.
      (3) Definitions
        For purposes of this subsection -
        (A) Manufacturer
          The term ''manufacturer'' includes a producer or importer.
        (B) Total gas guzzler tax
          The term ''total gas guzzler tax'' means the tax imposed by
        section 4064, computed at the rate in effect on the date of the
        first lease.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 494; Aug. 9, 1955, ch. 677, Sec.
    3, 69 Stat. 614; Pub. L. 85-859, title I, Sec. 117(a), Sept. 2,
    1958, 72 Stat. 1280; Pub. L. 94-455, title XIX, Sec. 1904 (a)(3),
    Oct. 4, 1976, 90 Stat. 1811; Pub. L. 95-618, title II, Sec. 201(d),
    Nov. 9, 1978, 92 Stat. 3184.)
 

Miscellaneous

                                 AMENDMENTS
      1978 - Subsec. (e). Pub. L. 95-618 added subsec. (e).
      1976 - Subsec. (d)(4). Pub. L. 94-455 struck out par. (4)
    relating to special transitional rules applicable to leases.
      1958 - Pub. L. 85-859 substituted ''Leases'' for ''Lease
    considered as sale'' in section catchline.
      Subsec. (a). Pub. L. 85-859 redesignated existing provisions as
    subsec. (a) and struck out provisions which made subsection
    inapplicable to the lease of an article upon which the tax has been
    paid in the manner provided in section 4216(d)(1) or the total tax
    has been paid in the manner provided in section 4216(d)(2) of this
    title.
      Subsecs. (b) to (d). Pub. L. 85-859 added subsecs. (b) to (d).
      1955 - Act Aug. 9, 1955, exempted lease of an article upon which
    tax has been paid under section 4216(d)(1) or section 4216(d)(2) of
    this title.
                      EFFECTIVE DATE OF 1978 AMENDMENT
      Amendment by Pub. L. 95-618 applicable with respect to 1980 and
    later model year automobiles, see section 201(g) of Pub. L. 95-618,
    set out as an Effective Date note under section 4064 of this title.
                      EFFECTIVE DATE OF 1976 AMENDMENT
      Amendment by Pub. L. 94-455 effective on first day of first month
    which begins more than 90 days after Oct. 4, 1976, see section
    1904(d) of Pub. L. 94-455, set out as a note under section 4041 of
    this title.
                      EFFECTIVE DATE OF 1958 AMENDMENT
      Amendment by Pub. L. 85-859 effective on first day of first
    calendar quarter which begins more than 60 days after Sept. 2,
    1958, see section 1(c) of Pub. L. 85-859.
                      EFFECTIVE DATE OF 1955 AMENDMENT
      Section effective on first day of first month which begins more
    than ten days after Aug. 9, 1955, see section 4 of act Aug. 9,
    1955, set out as a note under section 4216 of this title.
                 APPLICATION OF LEASES OF UTILITY TRAILERS
      Section 117(c) of Pub. L. 85-859, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
    amendments made by subsections (a) and (b) (amending this section
    and section 4216 of this title) shall not apply to any lease of an
    article if section 4216(d) of the Internal Revenue Code of 1986
    (formerly I.R.C. 1954, prior subsec. (d) of section 4216 of this
    title) applied to any lease of such article before the effective
    date specified in section 1(c) of this Act.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 4002, 4003, 4052, 4216 of
    this title.