A financing arrangement exists at least three parties (a financing entity, an intermediate entity an a financed entity) participate in least two related financing transactions.
Assignments by the financing entity of the financed entity's loan to an intermediate entity (see Aiken Industries).
For example, if a financing entity capitalizes an intermediate entity only through an ordinary common stock investment and the intermediate entity lends the funds to the financed entity, there will not be a financing arrangement.
he IRS has previously applied conduit principles to disregard an intermediate entity apparently in an ordinary preferred stock situation; see Letter Ruling (TAM) 9133004 (stock investment in intermediate entity, followed by loan to the financed entity, its U.
Whether the intermediate entity would have been able to make the advance to the financed entity without the advance to it from the financing entity; 3.
The complementary business exception: An intermediate entity that is related to the financed entity is presumed not to take part in a tax avoidance plan if the financing arrangement allows the financed entity to actively engage in a business that forms a part of, or is complementary to, a substantial business actively engaged in by the intermediate entity.
A single periodic invoice includes all leased and financed
resources, which allows clients to benefit from simplified budgeting, planning, and accounts payable, thus enhancing the total value of transactions.