View Full Version : Equipment Sale/Leaseback
07-05-2001, 10:01 PM
This is my first post, so am looking forward to some response.
Saw an article in the ALCA magazine and Mr. Kujawa's strategy of
personally buying equipment and then leasing it to his company.
Trying to get sense of it and the pros and cons of it. Anyone
have current information?
Would it make sense to form another company to purchase the
and then lease it to the landscape side? Or is it better to do it personally? What kind of paperwork is involved? Do you need lawyer? CPA?
Appreciate any assistance or expertise.
Incidentally, it's 85 degrees and surfs up!
07-06-2001, 02:23 PM
There's a person in this forum that does this, but I won't mention names in case the person wants to remain anonymous.
I only know what I was told, but I would think the cons would be additional paperwork, and potentially double taxation of some profits. However, a big plus, especially if you own a good deal of equipment, is that if your landscape co. does something that incurs a big lawsuit that takes everything the landscape co has, that will only be a bunch of hand tools, because the big eqpt is owned by a different company (also yours).
IMHO, this might only be worthwhile if you have a good lot of toys. I would think you wouldn't move with this without legal counsel. You're trying to limit liability by using legaleze - they know it better than you do.
Aloha and hang loose.
07-06-2001, 03:24 PM
I think this is very interesting. Can someone who does this explain it more? I own quite a few "toys" that I would like to lease to my Company.
Is this possible?
You have to remember that if you already bought the equipment in your companys name you have to pay to have it transfered to the other company. This sets you up for higher taxes. You better get info from your accountant and lawyer. Remember you are going to have to pay taxes twice!
Reasons to do this, You are in a high profile, high risk environment.
07-06-2001, 08:56 PM
I also think (hearing from agent) that if you lease your equipment that your insurance is higher...I guess you might be liable in some cases.
07-07-2001, 09:11 AM
It can be done, and without all the taxation that is thought to be necessary - however, it DOES take a savy accountant to set it all up. Depreciation schedules and income flow are critical, but easily done once set up at the beginning. Additionally, transfering assets between entities can be a taxable event if not done carefully.
The assets usually have to be considerable (a million or more) to make it worth the paperwork. Properly managed insurance coverage can avoid most problems if your assets total less than a half million.
For what it's worth, I strongly recommend seeing an accountant as there can be state and local considerations to be taken into account.
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