Capital Resources, LLC

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Description

Accelerated Cost Recovery System (ACRS): The depreciation schedule of the Economic Recovery Tax Act of 1981 (ERTA), modified by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), that allows faster write offs of plant and equipment is classified as 3,5, or 10 years property. The accelerated cost recovery system (ACRS) replaced the asset depreciation range (ADR) system which was built on the concept of useful life. ACRS (Modified): The Tax Reform Act of 1986 modified the ACRS by prescribing depreciation methods for each ACRS class in lieu of statutory tables. Equipment is assigned among 3,5,7,10,15, or 20 year classes depending on ADR lives. Advanced Lease Payment(s): The payment or payments made at the initiation of the lease contract, i.e. first rental payment or first and last rental payments. Alternative Minimum Tax: An alternative, separate tax calculation based on the taxpayer's regular taxable income, increased by the taxpayer's preference for the year. The resulting amount is called the alternative maximum taxable income (AMT). After certain exemptions and offsets, the taxpayer determines his/her AMT and is required to pay the larger of the regular tax or alternative minimum tax. Among the preferences which can increase the taxpayer's AMT is the accelerated portion of depreciation, thereby making it more likely for a taxpayer that buys equipment to be subject to the AMT rather than regular tax. Authorized Signature: A signature by a person authorized by a company to obligate the company on a long-term lease. An authorized signer will usually be substantiated by the Corporate Resolution which specifies who can sign and what his/her responsibilities may be. Bargain Renewal Option: A lease provision allowing the lessee, at this option, to renew the equipment lease for a rental rate predetermined at lease inception, that is substantially lower than the expected fair market value at the date the option can be exercised. Broker: A broker acts as the middle-man between the lessee (the user of the equipment) and the full service leasing company that ultimately provides the credit approval, documentation, funding, and billing. There are many leasing companies that act as brokers and receive a fee for their work. There are fewer full service leasing companies that have the ability to hold and service their leases throughout the entire term of the lease. The full service lessor provides greater control for the lessee and/or vendor in the event the lessee wants to upgrade or early terminate their lease. Since there is no middleman, doing business directly with a full service lessor usually results in a lower lease rate for the lessee and a higher sale price for the vendor.

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