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Debevoise & Plimpton is one of the nation's leading international law firms.The firm's 380 lawyers are located in New York, Washington, D.C., Paris,London, Budapest and Hong Kong. Debevoise & Plimpton lawyers practice inthe areas of corporate, litigation, tax, real estate and trusts & estates law.In addition, the firm has an active and well-known multidisciplinary cyberspace practice group.

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IRS Issues Ruling on Defeased
Cross Border Lease

Memos of ImportanceOur Offices

The IRS has released a technical advice memorandum regarding the U.S. taxtreatment of a defeased Japanese leveraged lease. The memorandum concludesthat the lease is a loan, rather than a true lease, and that the U.S. lesseeis the owner of the leased aircraft. The memorandum also concludes that the

lessee realized income upon the defeasance of the regularly scheduled lease payments.In the transaction, the U.S. lessee sold the aircraft to the Japanese lessorand simultaneously entered into a lease under which the lessee retained thebenefits and burdens of ownership (other than legal title)...

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