CLFP Exam Questions With 100% Correct Answers Latest (Graded A+)

CLFP Exam Questions With 100% Correct Answers Latest (Graded A+) A lease, which for tax purposes, fails to meet all of the tests for a conditional sales contract under IRS Revenue Ruling 55-540 and therefore entitles the lessor to qualify for the tax benefits of ownership and the lessee to claim the entire amount of the lease rental as a tax deduction Finance Lease - Correct Answer-As most frequently used, a net lease, which has its purpose the finance of the use of property for a major portion of the property's useful life. The term is typically used in reference to leases written by third part lessors. FASB 13 (1976) - Correct Answer-If meets any of criteria, will be capital lease 1.Automatic transfer of title 2. Bargain purchase option -cancellable term is greater than 75% of economic life of asset 4. 90% rule Economic Recovery Tax Act(1981) - Correct Answer-Replaced asset depreciation range (ADR) 1972 Streamlined to 5 asset classes 3-15 year life span Tax Reform Act of 1986 - Correct Answer-Eliminated ITC Widened reach of AMT Alternative Minimum Tax Why Equipment Financing is Popular - Correct Answer-1. Psychology of use preference over ownership 2. Obsolescence and inflation hedge 3. Affordability to lessee 4. Tax advantages to lessors and lessees 5. Diversification of financing sources 6. Conservation of working capital 7. off-balance sheet financing 8. Profitable experience of the leasing industry 9. Convenience to the lessee 10. Flexibility in lead structuring 11. Restrictive covenants from bank Equipment lease definition - Correct Answer-A transaction in which use and possession but not title to tangible property is transferred for consideration CLFP Exam Questions With 100% Correct Answers Latest | Graded A+ Closed end lease - Correct Answer-A lease wherein the lessee has no purchase or renewal rights and therefore must return the equipment to the lessor at the termination of the lease. No option to buy. Master lease - Correct Answer-A form of documentation that includes one document, which outlines all of the basic terms and conditions of the lease agreement and then separate schedules referring back to the main document At risk rules - Correct Answer-Those provisions in the Internal Revenue Code, which require that a party seeking to claim certain benefits under the tax code, such as interest deduction and depreciation must be "at risk" for certain, specified amounts in a relationship to such desired tax benefits Section 38 Property - Correct Answer-Any asset on which depreciation may be taken, as defined by the IRS Operating Lease - Correct Answer-From an accounting perspective, any lease that has the characteristics of a usage lease and also fails to meet any of the criteria set forth under FASB 13 for a capital lease. Also known as a service lease. Leveraged Lease - Correct Answer-Any of the specific types of leases involving at a minimum, a lesser, a lessor, and a funding source from whom the lessor borrows a significant portion of the cost of equipment and takes an equity position in the remainder. True lease/tax lease - Correct Answer-A lease for which tax purposes, fails to meet all of the tests for a conditional sales contract under IRS Revenue Ruling 55-540 and therefore entitles the lessor to qualify for the tax benefits of ownership and the leases to claim the entire amount of the lease rental as a tax deduction. ITC - Correct Answer-Investment Tax Credit A credit against taxes otherwise due from a taxpayer under the Internal Revenue Code. The credit is generally computed as the percentage of costs of certain assets. ( (Se IRC Section 38 and 46-50 Tax reform act of 1986 - Correct Answer-Effectively repealed the ITC for newly acquired property. net lease:triple net lease - Correct Answer-A lease in which all of the costs in connection with the use of property such as maintenance,insurance, and property taxes are paid for separately by the lesser and are not included in the rental payment to the lessor.