79.2. TYPES OF EQUIPMENT LEASES

Equipment leases fall into the following two general categories: (1) non-tax-oriented leases and (2) tax-oriented true leases. While there is a third type of specialized lease that is not discussed here a tax-oriented TRAC lease for over-the-road vehicles, we limit our discussion to non-tax-oriented leases and tax-oriented true leases. We discuss each type of lease in the following sections.

79.2.1. Non-Tax-Oriented Leases

Non-tax-oriented leases, most commonly referred to as a conditional sales leases, transfer substantially all of the benefits and risks incidental to ownership of the leased property to the lessee and usually give the lessee a fixed-price bargain purchase option or renewal option not based on fair market value at the time of exercise.