Page:United States Statutes at Large Volume 100 Part 3.djvu/330

 100 STAT. 2138

PUBLIC LAW 99-514—OCT. 22, 1986 (c) CONTINUATION OF RULES RELATING TO MOTOR VEHICLE OPERAT-

ING LEASES.—Section 7701 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: "(h) MOTOR VEHICLE OPERATING LEASES.—

"(1) IN GENERAL.—For purposes of this title, in the case of a qualified motor vehicle operating agreement which contains a terminal rental adjustment clause— "(A) such agreement shall be treated as a lease if Ojut for such terminal rental adjustment clause) such agreement would be treated as a lease under this title, and "(B) the lessee shall not be treated as the owner of the property subject to an agreement during any period such agreement is in effect. "(2)

QUALIFIED MOTOR VEHICLE OPERATING AGREEMENT DE-

FINED.—For purposes of this subsection— "(A) IN GENERAL.—The term 'qualified motor vehicle operating agreement' means any agreement with respect to a motor vehicle (including a trailer) which meets the requirements of subparagraphs (B), (C), and (D) of this paragraph. "(B) MINIMUM LIABILITY OF LESSOR.—An agreement meets the requirements of this subparagraph if under such agreement the sum of— "(i) the amount the lessor is personally liable to repay, and "(ii) the net fair market value of the lessor's interest in any property pledged as security for property subject to the agreement, equals or exceeds all amounts borrowed to finance the acquisition of property subject to the agreement. There shall not be taken into account under clause (ii) any property pledged which is property subject to the agreement or property directly or indirectly financed by indebtedness secured by property subject to the agreement. "(C)

CERTIFICATION BY LESSEE; NOTICE OF TAX OWNER-

SHIP.—An agreement meets the requirements of this subparagraph if such agreement contains a separate written statement separately signed by the lessee— "(i) under which the lessee certifies, under penalty of perjury, that it intends that more than 50 percent of the use of the property subject to such agreement is to be in a trade or business of the lessee, and "(ii) which clearly and legibly states that the lessee has been advised that it will not be treated as the owner of the property subject to the agreement for Federal income tax purposes. "(D) LESSOR MUST HAVE NO KNOWLEDGE THAT CERTIFICATION IS FALSE.—An agreement meets the requirements of

this subparagraph if the lessor does not know that the certification described in subparagraph (C)(i) is false. "(3) TERMINAL RENTAL ADJUSTMENT CLAUSE DEFINED.—

"(A) IN GENERAL.—For purposes of this subsection, the term 'terminal rental adjustment clause' means a provision of an agreement which permits or requires the rental price to be adjusted upward or downward by reference to the

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