In a recent Private Taxpayer Ruling, the Arizona Department of Revenue classified two nearly identical leases differentially because of differing end of lease options. Lease #1″. agreement provided for the lessee to purchase the property at the end of the term for a nominal, pre-determined price of $1.00. Lease #2″. agreement provided for the lessee to purchase the property at the end of the term for a price equal to 10% of the adjusted capitalized cost of the leased property, an amount determined more than nominal. Considering this difference, the Department determined that Lease #2 was a true lease for transactions privilege tax purposes, and therefore was subject to the tax levied on the business of renting or leasing personal property. However, Lease #1 was determined not to be a true lease, and therefore subject to transactions privilege tax under the retail classification. (Private Taxpayer Ruling LR07-001, Arizona Department of Revenue, March 19, 2007)