Leveraged Leasing Transaction Services
Capabilities and Services
The recent proliferation of firms using leveraged leases to finance assets can largely be attributed to the advantageous tax benefits involved. Once limited primarily to airlines and railroads for their large capital equipment needs, leveraged leases have become a preferred source of financing for a variety of assets, from power projects to telecommunications equipment. Cross-border leasing deals seek to capitalize on tax law differences between the countries involved in the transaction.
Whether domestic or international, any lease transaction involving one or more US entities requires an interest rate letter in order to qualify for the tax benefits. Because leveraged leases are private transactions, the IRS stipulates an independent review of the transaction and the parties involved. The letter is a written opinion verifying that the interest rate embedded in the lease is "commercially reasonable for an arm's length transaction."
