NAC372.928. Sale of tangible personal property designated as finance lease.

     1. If tangible personal property is sold, but the transaction is designated as a finance lease:

     (a) The transaction is a sale;

     (b) The tax applies to the transaction in the same manner as a conditional sale described in NAC 372.050;

     (c) The lessee is deemed to be the purchaser of the tangible personal property; and

     (d) If applicable, the purchaser may elect, pursuant to NRS 372.170 or 372.240, to pay the tax on the use of that property as measured by the amount of the rental charged for the property rather than the cost of the acquisition of that property.

     2. For the purposes of this section, a transaction is a finance lease if the only use of the tangible personal property that the lessee is authorized to make pursuant to the lease is the leasing of the tangible personal property as a sublessor to another party as a sublessee. If the lessee uses or has the right to use the tangible personal property in any other manner, the transaction is not a finance lease. The following factors indicate that a transaction is a finance lease:

     (a) The lessee never had possession of the tangible personal property; and

     (b) The lessee is required, pursuant to the lease, to:

          (1) Pay any applicable fees assessed against the tangible personal property;

          (2) Assume all risk of loss of the tangible personal property; and

          (3) Maintain insurance on the tangible personal property.

     3. As used in this section, “possession” does not include the maintenance, licensing or registration of the tangible personal property.

     (Added to NAC by Tax Comm’n by R058-02, eff. 1-17-2003)—(Substituted in revision for NAC 372.086)