For a high-technology item like computer equipment is the lease option preferable from the very outset and why?

This argument has changed thru time as tax and accounting law has evolved. In the past, if you purchased an expensive piece of equipment like a computer (which used to cost about $10k in 1982) and paid for it outright, you had to use standard depreciation tables and could only take a portion of the value each year as a deduction. It might take you 10 years to finally write off that computer even though you through it away 7 years before. This was because a computer at the time cost about as much as a pick up truck and the IRS depreciated many expensive items the same way regardless of their "real" lifespan. (Computer equipment becomes obsolete in a short amount of time lets say compared to a bulldozer or industrial compressor which could last for 20 years or more.)

Leases solved that problem for many companies. Because a lease in really only a long term rental agreement (with a cheap buyout), businesses wrote off every payment as they were made. They didn't have to wait for 10 years or more. They also didn't have to take an accounting hit as the lease was cloaked as "equipment rental" and there was no visible long term liability. This created a huge tax and accounting incentive to lease over buy.

When FASB accounting principals changed a few years ago, leases of computers, car and other expensive items now had to be "capitalized", and the company had to show on their balance sheets a corresponding liability for each lease. This made leasing not as attractive for some businesses already saddled with lots of debt on their books.

Regardless of buy or lease, unless there is a substantial (say 40% or more) residual value, it really doesn't matter. Just be warned that many small item leases have buried interest rates (they call them "factors") of 20% APR or more. So buy it if you want to save money and don't pay an outrageous interest rate just to say you "leased it". The hidden lease charges will usually more than offset any tax advantage.

A lease option is preferable for the following reasons:

1. You are not saddled with obsolescence (typical of a high tech item). You can return the item / upgrade without much trouble (depending on the type of lease).

2. Usually high tech items depreciate very fast - hence if you plan to use the computer equipment for a short period of time, it is a good idea to lease it.