Nev. Admin. Code § 372.926 — 372.926

NAC 372.926    Sale of tangible personal property designated as lease or rental
for purpose of retaining security interest. ( NRS
360.090 , 372.385 , 372.725 )
1.  If tangible personal property is sold,
but the transaction is designated as a lease or rental for the purpose of
retaining a security interest in the property, the transaction is a sale and
the tax applies to the transaction in the same manner as a conditional sale
described in NAC 372.050 . A security
interest in the property is created if the consideration paid by the lessee for
the right of possession and use of the property is an obligation for the term
of the lease and is not subject to termination by the lessee, and:
(a) The original term of the lease is equal to or
greater than the remaining economic life of the property;
(b) The lessee is required to renew the lease for
the remaining economic life of the property or purchase the property;
(c) The lessee has an option to renew the lease for
the remaining economic life of the property without the payment of any
additional consideration or with the payment of nominal additional
consideration if he or she complies with the terms of the lease; or
(d) The lessee has an option to purchase the
property without the payment of any additional consideration or with the
payment of nominal additional consideration if he or she complies with the
terms of the lease.
Ê For the
purposes of this subsection, the economic life of the property will be
determined with reference to the facts and circumstances at the time of the
transaction.
2.  An agreement does not create a security
interest merely because it provides that:
(a) The present value of the consideration the
lessee is obligated to pay the lessor for the right to possession and use of
the property is substantially equal to or is greater than the fair market value
of the property at the time the lease is entered into;
(b) The lessee assumes the risk of loss of the
property, or agrees to pay taxes, insurance, filing, recording or registration
fees, or service or maintenance costs with respect to the property;
(c) The lessee has an option to renew the lease or
to become the owner of the property;
(d) The lessee has an option to renew the lease for
a fixed amount that is equal to or greater than the reasonably predictable fair
market rent for the use of the property for the term of the renewal at the time
the option is to be performed; or
(e) The lessee has an option to become the owner of
the property for a fixed price that is equal to or greater than the reasonably
predictable fair market value of the property at the time the option is to be
performed.
3.  Except as otherwise provided in
subsection 4, additional consideration shall be deemed nominal if:
(a) It is less than the lessee may reasonably
expect to pay for the property if it were purchased at fair market value when
the option is exercised.
(b) The original sales price of the property is
less than $1,000 and the amount of the additional consideration is not more
than $150.
(c) The original sales price of the property is
$1,000 or more and:
(1) The lease is for not more than 4 years;
and
(2) The amount of the additional consideration
is not more than $150 or 10 percent of the original sales price, whichever is
greater.
(d) The original sales price of the property is
$1,000 or more and:
(1) The lease is for more than 4 years; and
(2) The amount of the additional consideration
is less than 20 percent of the original sales price.
4.  Additional consideration shall not be
deemed nominal if:
(a) When the option to renew the lease is granted
to the lessee, the amount stated in the lease is the fair market value for the
use of the property for the term of the renewal of the lease; or
(b) When the option to become the owner of the
property is granted to the lessee, the price stated in the agreement is the
fair market value of the property.
[Tax Comm’n, Combined Sales and Use Tax Ruling part No.
61, eff. 3-1-68]—(NAC A 9-16-92)—(Substituted in revision for NAC 372.070)