38 CFR 61.4 – Definition of capital lease
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A capital lease, for purposes of this part, means a conditional sales contract that either:
Terms Used In 38 CFR 61.4
- Contract: A legal written agreement that becomes binding when signed.
- Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
(a) Will be in effect for all of the period of recovery listed in § 61.67(b); or
(b) That satisfies one of the following criteria:
(1) The lease transfers ownership to the lessee at the expiration of the lease term.
(2) The lease contains a bargain purchase option.
(3) The present value of lease payments that are applied to the purchase are equal to or greater than 90 percent of the fair market value of the asset.