Alternative Minimum Tax
(AMT) - A separate tax calculation in which a taxpayer must pay
the higher of its regular tax or AMT liability. The corporate AMT rate, although lower than the regular tax
rate, is applied to a different, typically higher, taxable income than for regular taxes. This form of tax
makes it more difficult to avoid paying "fair share" of tax through the use of certain regular tax benefits,
which are known as "tax preference items" or "adjustment items".
Bargain Purchase Option
- An option allowing the lessee to purchase the lease asset at
the end of the lease term for a price that is fixed substantially below the expected "fair market value",
such that, at the inception of the lease, purchase appears to be reasonably assured.
Bargain Renewal Option
- A lease provision allowing the lessee to extend the lease for
an additional term with payments substantially lower than the fair value of the asset, such that exercise of
the option appears, at the inception of the lease, purchase appears to be reasonably assured.
Call Option - Another term for a purchase or a renewal option, that is
exercisable at the discretion of the lessee, not the lessor.
Capital Lease - A lease that from the financial reporting standpoint has the
characteristics of a purchase agreement, that meets at least one the criteria outlined in paragraph 7 of FASB
13. A capital lease must be shown as an asset and a related obligation on the balance sheet of the lessee.
(Also known as Financial Lease or Nontax Lease)
Certificate of Deliver and Acceptance (D &
A) - A document signed by the lessee to confirm the leased asset
has been delivered and is acceptable. In most cases, the least term commences once this document has been
Closed-End Lease - A true lease in which the lessor assumes the depreciation
risk. The lessee bears no obligation at the end of the lease. This term is used to distinguish the lease from
an open-end lease. This term is used in auto leasing.
Contract - An agreement for the purchase of an asset in which the
lessee is treated as the owner of the asset for federal income purposes, therefore entitled to the tax
benefits of ownership, such as depreciation.
Direct Financing Lease
- A lessor capital lease that does not give rise to
manufacturer's or dealer's profit (or loss) to the lessor.
Discounted Cash Flow
Analysis - Comparison of cash flows resulting from two or more
investment or payment obligation alternatives by calculating the "Present Value" of each, using the same
Economic Life of Leased Property
- The estimated period during which the property is expected to
be economically useful by one or more users, with normal repair and maintenance, or the purpose intended at
the inception of the lease.
Effective Lease Rate
- The effective rate to the lessee of cash flows resulting from
a lease transaction. The rate includes the compounding effect of interest during the year.
End of Term Options - Options stated in the lease agreement that give the lessee
flexibility in its treatment of the leased asset at the end of the lease. Common end of term options include
purchasing the asset, renewing the lease or returning the property to the lessor.
Value - The forecasted "fair market value" of the leased asset,
used for purposes of calculating the maximum allowable term of a tax-oriented lease, and calculated in
constant dollars (excluding inflation and deflation.)
Estimated Useful Life
- The period, during which an asset is expected to be useful in
a trade or business, used for calculation the maximum allowable term of a tax-oriented lease.
Fair Market Value
(FMV) - The value of an asset if it were to be sold in an
arms-length transaction, between a willing buyer and a willing seller. FMV is determined by either agreement
Fair Market Value (FMV) Purchase
Option - A lessee option to purchase the leased equipment at the end of
the term from the lessor at fair market value.
FASB 13 - Financial Accounting Standards Board Statement No 13,
"Accounting for Leases." FASB 13 contains specific guidelines for proper classification, accounting and
reporting of lease transactions.
Financing Statement - A notice of a security interest filed under the Uniform
Commercial Code (UCC).
Fixed Price Purchase
Option - A lessee option to purchase the lease asset at the end
of the leasing term at a predetermined price.
Full Payout Lease - A lease in which the cash flows will return to the lessor the
acquisition cost of the asset, the cost of financing, overhead and an acceptable return on investment.
Guideline Lease - A tax-oriented lease, which complies with all the IRS
guidelines for a "true" lease.
Implicit Rate - The discount rate that, when applied to the minimum lease
payments together with any unguaranteed residual, causes the aggregate present value at the inception of the
lease to be equal to the fair market value of the leased property.
Indemnity Clause - A clause in a master lease agreement that requires lessees to
indemnify lessors against any and all claims, suits, actions, damages, liabilities, expenses, costs,
including attorney fees, whether or not suit is instituted or incurred in connection with the equipment.
Lease Line - A lease line of credit that allows the lessee to add
equipment without having to renegotiate a new lease each time.
Lessor - Usually the owner of equipment being leased to a lessee
Leveraged Lease - A specific lease involving at least three parties: a
lessor, a lessee and a funding source, which allows the lessor/owner to purchase the equipment by making a
specific equity investment and to finance the remaining balance by issuing non-recourse note(s) to the
MACRS(Modified Accelerated Cost Recovery
System) - The current method of tax depreciation introduced by the
Tax Reform Act of 1986 and effective for equipment placed in service after 1986.
MACRS Deductions - Tax depreciation deductions calculated under the MACRS
introduced by the Tax Reform Act of 1986.
Master Lease - A lease agreement that allows a lessee to obtain additional
equipment under the same basic lease terms and conditions as originally agreed, without having to renegotiate
a new lease contract.
Municipal Lease - A conditional sales contract disguised in the form of a
lease available only to state and local governments, in which the interest earnings are tax-exempt to the
Net Lease - A lease in which the lessee assumes all the costs and
expenses related to use and maintenance of the leased asset.
Lease - A lease that is treated as a loan for tax purposes,
preventing the lessor from claiming tax benefits on the equipment. The lessee would be treated as the owner
for federal income tax purposes.
Off Balance Sheet
Financing- Any form of financing, such as an operating lease, that, for
financial purposes, is not required to be reported on a a firm's balance sheet.
Open-end Lease - A lease in which the lessee guarantees the amount of the
future residual value to be realized by the lessor at the end of the term. If the equipment is sold for less
than the guaranteed value, the lessee must pay the amount of any deficiency to the lessor. The lease is
referred to as open-end because the lessee does not know its actual value until the equipment is sold at the
end of the lease.
Operating Lease - A lease that has the characteristics of a usage
agreement and also meets certain criteria established by the FASB. Such a lease is not required to be shown
on the balance sheet of the lessee.
Purchase Option - A lessee option to purchase the leased asset from the lessor
at the end of the lease term for either a fixed amount or at the future fair market value of it.
Put Option - A potential requirement to purchase equipment or other assets
at a particular time and at a predetermined price. To exercise this option is at the lessor's, not the
Quasi Lease - A slang term for a non-tax oriented lease, also called a
Rentals - Payments required under a lease to be made by a lessee to a
lessor for the use of the lease equipment.
Renewal Option - An option given to the lessee to renew or extend the
term of a lease at the expiration of the base term.
Sale-leaseback - A transaction that involves the sale of equipment to a leasing
company and a subsequent lease of the same equipment back to the original owner, who continues to use the
Sales-type Lease - A lease in which the lessor is also the vendor
(manufacturer or distributor) of the equipment.
Salvage Value - The expected or realized value from selling a piece of
equipment after a reasonable allowance for the exhaustion, tear and wear, and obsolescence of a depreciable
Securitization - The process of selling lease receivables to a separate legal
entity that issues stocks and bonds to investors. The investors' proceeds flow through to the company that
sold the receivables and the investors receive their returns from collecting lessee receivables.
Sublease - A transaction in which leased property is re-leased by
the original lessee to a third party, and the lease agreement between the two original parties remains in
Stipulated Loss Value
- A clause in the master lease that incorporates required lessee
payments in the event of a default or casualty (loss or irreparable damage of the equipment) during the lease
TRAC Lease - A tax-oriented lease of motor vehicles or trailers that
contains a terminal rental adjustment clause and otherwise complies with the requirements of a guideline
True Lease/Tax Lease
- A tax-oriented lease, in which, for IRS purposes, the lessor
qualifies for the tax benefits of ownership and the lessee is allowed to claim the entire amount of the lease
rental as a tax deduction.
Turnaround Time - The time it takes to make a credit decision and inform
the lessee after receiving the lease application.
Two-Party Lessor- A captive leasing company, or a lessor, that writes leases
involving two parties: 1) the consolidated parent and/or captive leasing subsidiary and 2) the lessee or
end-user of the equipment.
Upgrade - An option that allows the lessee to add equipment to an
existing piece of leased equipment in order to increase its capacity or improve its efficiency.
Vendor Lease - A lease offered by a manufacturer or dealer to its customers
for financing its products.
Warehousing - The short-term funding of leases before permanent
funding is finalized.
Wintergreen Lease - A lease that requires the lessee to give notice to the
lessor in order to renew for another term. Otherwise, the lease terminates on the already established
Wrap Lease - A lease in which the lessor sells the equipment to an investor
for equity and a note payable over the lease term. This method effectively transfers tax benefits to an
To prequalify for financing, download the following forms and provide
the following information and fax to (202) 478-1811 or email to firstname.lastname@example.org:
Completed Tri-Merged Credit Report or Credit Authorization
2013 Business Financials (Seller / Borrower, if available)
2014 Year-To-Date Business Financials (Seller / Borrower, if available)
Last Three Years Fuel Gallonage (Seller / Borrower)
So what are you waiting for? You can convenienently apply online for a loan here or download the
prequalification form here. First time inquiries should inquire at email@example.com. Let us prove to you
that PetroMAC truly "pumps capital into YOUR C-store."