conditional sales contract

conditional sales contract

(1) A sales contract in which the buyer is given possession and use of the item sold,but the seller retains legal title until all payments have been made in full.Equipment leases for a term of years,at the end of which the buyer pays $1 to buy the property, have been characterized by the IRS as conditional sales contracts rather than true leases.As a result,the taxpayer is not allowed to deduct the full lease payments each year,but only an amount equal to the depreciation available if the property had been purchased for cash, plus an allocation for interest. This amount is usually less than the annual lease payment. (2) If pertaining to real estate, commonly called a bond for title,land sale contract, or contract for deed.