A Primary Difference Between Leveraged Leases and Other Financial Leases

question 34

Multiple Choice

A primary difference between leveraged leases and other financial leases is that ____.

• A) leveraged leases must be capitalized and shown on the lessee's balance sheet
• B) the lessor in a leveraged lease is invariably the manufacturer of the leased asset
• C) leveraged leases involve the use of nonrecourse debt
• D) unleveraged leases are usually tax-motivated

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Definitions:

Non-working Spouse

A spouse who does not engage in regular paid employment outside the home.

Previously-taxed Dollars

Funds that have already been subject to taxation, not requiring further tax upon withdrawal or transfer.

Qualified Pension Plan

A retirement plan that meets the requirements of the Internal Revenue Code and ERISA, offering tax advantages to the employer and employee.

Nontaxable

refers to income or financial transactions that are not subject to tax by the government.