Asset-backed investment instrument and related methods

• US 20090187512A1
• Filed: 05/31/2005
• Published: 07/23/2009
• Est. Priority Date: 05/31/2005
• Status: Abandoned Application

• Current Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Original Assignee: JP Morgan Chase Bank, N.A. (JP Morgan Chase & Co)
• Inventors: McCarthy, Patrick, Cho, John, Wiener, Janet, Sun, Mark, Giroux, Jeffrey A., Prince, Philip
• Application Number:
  US11/141,551
• Publication Number:
  US 20090187512A1
• Time in Patent Office: Days
• US Class Current: 705/36.T
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies

Abstract

An asset-backed investment instrument that increases deferred tax liabilities for an investor and, therefore, is attractive to any investor that benefits from deferred tax liabilities, such as certain insurance companies. Ownership of an asset underlying the investment instrument is transferred to an investing entity. The transferred asset is leased from the investing entity for a predetermined period. The lease may include a like-kind exchange feature to lengthen the predetermined period of the lease and to allow the accrued deferred tax liabilities to remain outstanding for a longer period of time. The lease may also include a Terminal Rental Adjustment Clause to remove the risk of a change in an estimated residual value from the investing entity.

Claims

1. A method for implementing an investment backed by one or more assets, the method comprising the steps of:

transferring ownership of at least one asset of the one or more assets to an entity, wherein the one or more assets are assets for which tax depreciation may be claimed, wherein the entity is an investor, an entity owned at least in part by the investor, or an entity having an ancestor owned at least in part by the investor, and wherein the investor is an insurance company;

entering into a lease of the transferred asset(s) from the entity for a predetermined period; and

reinvesting proceeds from a sale of one of the assets transferred to the entity in another asset to be leased without causing taxes to be due on proceeds from the sale.

2. The method of claim 1, wherein the investment is rated.

4. The method of claim 1, wherein the lease includes a like-kind exchange provision.

6. The method of claim 1, wherein the lease includes a Terminal Rental Adjustment Clause (“

TRAC provision”

).

7. The method of claim 1, further comprising the step of making a payment if an estimated residual value of the transferred asset(s) exceeds an actual residual value of the transferred asset(s) at the end of the predetermined period.

8. The method of claim 1, wherein the predetermined period is based upon a useful economic life of the transferred asset(s).

9. The method of claim 1, wherein the predetermined period is up to a percentage of a useful economic life of the transferred asset(s).

10. The method of claim 1, wherein an asset of the one or more assets is an automobile, a railcar, a motorcycle, an airplane, a boat, a ship, or real property.

11. The method of claim 1, further comprising the step of retaining at least one of the assets as collateral for the lease.

12. The method of claim 1, further comprising the step of retaining a cash accumulation account as collateral for the lease.

3. The method of claim I, wherein the investment is Nationally Recognized Statistical Rating Organization (“

NRSRO”

) rated.

5. (canceled)

13. A method for implementing an investment backed by one or more assets, the method comprising the steps of:

transferring ownership of at least one asset of the one or more assets to an entity, wherein the one or more assets are assets for which tax depreciation may be claimed, and wherein the entity is an investor, an entity owned at least in part by the investor, or an entity having an ancestor owned at least in part by the investor;

entering into a lease of the transferred asset(s) from the entity for a predetermined period;

reinvesting proceeds from a sale of one of the assets transferred to the entity in another asset to be leased without causing taxes to be due on proceeds from the sale; and

making a payment if an estimated residual value of the transferred asset(s) exceeds an actual residual value of the transferred asset(s) at the end of the predetermined period.

31. A method for facilitating an investment, the method comprising the step of providing assistance to an involved entity, which is involved with executing the method of claim 13.

32. The method of claim 31, wherein the involved entity is a finance company or an investor.

33. The method of claim 31, wherein the involved entity is an insurance company.

14. An investment instrument backed by an asset, the investment instrument comprising a lease from a first entity to a second entity for an asset sold by the second entity to the first entity, wherein the asset is an asset for which tax depreciation may be claimed, and wherein proceeds from a sale of the asset are reinvested in another asset to be leased.

15. The investment instrument of claim 14, wherein the investment instrument is rated.

16. The investment instrument of claim 14, wherein the investment instrument is Nationally Recognized Statistical Rating Organization (“

NRSRO”

) rated,

17. The investment instrument of claim 14,

wherein the second entity is a special purpose entity (“

SPE”

) lessee owned by a finance company and is capitalized with at least a first group of assets, and

wherein the first entity is a SPE lessor that purchases the first group of assets from the SPE lessee with funds from at least one investor, and leases the first group of assets to the SPE lessee for a predetermined period.

18. The investment instrument of claim 17, wherein the at least one investor is an insurance company.

19. The investment instrument of claim 17, wherein ownership of the first group of assets is represented by a specific interest certificate.

20. The investment instrument of claim 17, wherein ownership of the first group of assets is represented by a special unit of beneficial interest.

21. The investment instrument of claim 14, wherein the lease includes a Terminal Rental Adjustment Clause (“

TRAC provision”

).

22. The investment instrument of claim 17, wherein the SPE lessee makes a payment to the SPE lessor if an estimated residual value of the first group of assets exceeds an actual residual value of the first group of assets.

23. The investment instrument of claim 17, wherein the SPE lessee is further collateralized with a second group of assets that the SPE lessee pledges as security for obligations under the lease.

24. The investment instrument of claim 17, wherein ownership of the second group of assets is represented by a special unit of beneficial interest.

25. The investment instrument of claim 17, wherein ownership of the second group of assets is represented by a specific interest certificate.

26. The investment instrument of claim 17, wherein the SPE lessee is further collateralized with a cash accumulation account that the SPE lessee pledges as security for obligations under the lease.

27. The investment instrument of claim 17, wherein the predetermined period is based upon a useful economic life of the first group of assets.

28. The investment instrument of claim 17, wherein an asset in the first group is an automobile, a railcar, a motorcycle, an airplane, a boat, a ship, or real property.

29. The investment instrument of claim 17, wherein the SPE lessee subleases the first group of assets.

34. A method for facilitating an investment, the method comprising the step of providing assistance to an entity involved with implementing the investment instrument of claim 14.

35. The method of claim 34, wherein the entity involved with implementing the investment instrument is a finance company associated with the second entity or an investor associated with the first entity.

36. A method for facilitating an investment, the method comprising the step of providing assistance to an entity involved with implementing the investment instrument of claim 15.

37. The method of claim 36, wherein the entity involved with implementing the investment instrument is a finance company associated with the second entity or an investor associated with the first entity.

38. A method for facilitating an investment, the method comprising the step of providing assistance to an entity involved with implementing the investment instrument of claim 18.

39. The method of claim 38, wherein the entity involved with implementing the investment instrument is a finance company associated with the second entity or an investor associated with the first entity.

40. A method for facilitating an investment, the method comprising the step of providing assistance to an entity involved with implementing the investment instrument of claim 22.

41. The method of claim 40, wherein the entity involved with implementing the investment instrument is a finance company associated with the second entity or an investor associated with the first entity.

30. An investment instrument backed by an asset, the investment instrument comprising a lease from a first entity to a second entity for an asset sold by the second entity to the first entity,

wherein the asset is an asset for which tax depreciation may be claimed,

wherein proceeds from a sale of the asset are reinvested in another asset to be leased,

wherein the second entity is a special purpose entity (“

SPE”

) lessee owned by a finance company and is capitalized with at least a first group of assets,

wherein the first entity is a SPE lessor that purchases the first group of assets from the SPE lessee with funds from at least one insurance company investor, and leases the first group of assets to the SPE lessee for a predetermined period,

wherein the predetermined period is based upon a useful economic life of the first group of assets,

wherein the SPE lessee makes a payment to the SPE lessor if an estimated residual value of the first group of assets exceeds an actual residual value of the first group of assets, and

wherein the SPE lessee is further collateralized with a second group of assets that the SPE lessee pledges as security for obligations under the lease.