SECTION 3. SCOPE

This revenue procedure applies in the case of transactions commonly called “leveraged leases.” Such leases generally involve three parties: a lessor, a lessee and a lender to the lessor. In general, these leases are net leases, the lease term covers a substantial part of the useful life of the leased property, and the lessee’s payments to the lessor are sufficient to discharge the lessor’s payments to the lender.

The guidelines set forth in this revenue procedure clarify the circumstances in which an advance ruling recognizing the existence of a lease ordinarily will be issued solely to assist taxpayers in preparing ruling requests and the Service in issuing advance ruling letters as promptly as practicable. These guidelines do not define, as a matter of law, whether a transaction is or is not a lease for federal in

come tax purposes and are not intended to be used for audit purposes.