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Thursday, March 23rd 2017



Finance/Capital Lease:

This lease, for accounting purposes, must be capitalized. That is, it must be booked as an asset with an offsetting liability on the Balance Sheet. However, it may still qualify as a true lease, so the lease payments can be made with "before tax" dollars, like rent. Thus, Uncle Sam helps the farmer pay for the equipment.

Purchase Renewal Option (PRO) Lease:
This lease is similar to the Finance/Capital Lease, but the Lessor retains the depreciation. This is a true lease, and the payments are fully tax deductible by the farmer, lessee. Thus the farmer gets a lower lease payment because of the tax benefit to the Lessor.

Operating Lease:
This type of lease must meet very specific accounting tests as required by the American Institute of Certified Public Accountants (AICPA). This lease is not recorded on the farmer's balance sheet. The payment is an operating expense and the lease appears as a footnote to the farm financial statements.

Lease Credit Line:
A Lease Credit Line gives the farmer lower lease rates when the farmer has determined his total equipment requirements for the next year. The Lease Credit Line allows individual equipment lease takedowns, when the equipment is needed.

Special Leases Requiring Interim Payments to Vendors:
Interim payments are often required when leasing structural equipment, such as grain bins, equipment for cotton gins, hatchery and dairy equipment. The manufacturer or the vendor often requires progress payments or “interim payments” as the equipment is being installed. We will accommodate this need, and the Lease will not commence until the leased asset installation is complete and is accepted by the lessee.

TRAC (Terminal Rental Adjustment Clauses) Lease:
This lease helps preserve working capital, decrease costs associated with vehicles, and increase profits. Advantages include competitive financing rates, low monthly payments, off balance sheet financing, and tax-deductible lease payments. In addition, TRAC leases carry NO penalties for mileage and wear and tear. Most new cars, light trucks, and heavy trucks are eligible for TRAC leasing.

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