--- Leslilake1 at aol.com wrote: > Thanks to dave and g. geboski for information
on accessing corporate
> ownership information. well, I'm not gonna pay for the information, but it
> did give me a starting point. and found out I can find information for at
> least some consumer products through corporate websites. while going through
>
> one, found this (below), and my question is, what, exactly, is philip morris
> doing here? What's a "leveraged and direct finance lease"? It sounds like
> they're acting sort of like a bank? Anybody know what this is and if it's a
> trend (product companies moving into finance?)
>
> Les
>
The deal is this -- you get to deduct a certain percentage of your capital expenditure from your taxable profit. Pretty cool, but what if you're investing and don't have any taxable profit (say you're a start-up)? You can't pay negative tax. But what you can do is phone up a company with a huge, reliable stream of taxable income (say, Philip Morris), and ask them to buy the capital item and lease it to you. That way they get the benefit of the deduction, and the pair of you split the benefit of the tax you've avoided. Welcome to the world of leasing.
It's not a particularly new trend -- lots of cigarette companies used to own life assurers for broadly similar tax reasons.
cheers
dd
===== ... in countries which do not enjoy Mediterranean sunshine idleness is more difficult, and a great public propaganda will be required to inaugurate it. -- Bertrand Russell
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