- 6 -
rental anticipated to be received on each rental unit (except for
initial rental contracts on rental unit purchases as transfers
between companies as discussed below) would be 300 percent of its
initial cost. This method of determining the total gross rental
anticipated to be received was consistent with the practice in
the rent-to-own industry. In determining the weekly or monthly
rental rate, as the case may be, for each rental unit, the
Entities divided such expected total gross rental by the total
number of weeks or months, as the case may be, under the initial
rental contract for such rental units.
Whenever a rental unit either was picked up by an Entity or
returned to that Entity prior to all payments being made under
the initial rental contract, due either to a failure of the
customer to timely pay periodic rent or the exercise by the
customer of the customer's rights to return the rental unit at
any time, normally a subsequent rental contract, having the same
provisions and weekly or monthly rental payment as the initial
rental contract, would be executed with another customer.4
During the tax years in issue, each Entity periodically sold or
4The term of the subsequent rental contract would be
adjusted, when so required, according to the Entity's internal
schedule. This internal schedule might require a reduction in
the term of the lease depending upon the number of days the
rental unit had been previously rented. In a small minority of
circumstances, the weekly or monthly rental payments also would
be reduced under the subsequent rental contract on returned
rental units which had sustained a diminished value beyond normal
wear and tear. Normally this procedure would continue to be
followed until a customer retained the rental unit for the full
term of the rental contract.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011