Common use of Requirements for sale and leaseback transaction Clause in Contracts

Requirements for sale and leaseback transaction. If the property leased is fi- nanced by the lessee (or a related party of the leasee) in a sale and leaseback transaction, the lease will not qualify under section 168(f)(8) unless— (1) The term of the lessor’s purchase money obligation is coterminous with the term of the lease, and (2) The lessor’s obligation bears a reasonable rate of interest. For this purpose, a rate of interest shall be pre- sumed to be reasonable if, on the date the agreement is executed, it is within 3 percentage points of (i) the rate in ef- fect under section 6621, the prime rate in effect at any local commercial bank, or the most recent applicable rate de- termined by the Secretary under § 1.385–6 (e)(2)(i), or (ii) an arm’s-length rate as defined in § 1.482–2, or (iii) any rate between any two of the rates de- scribed by subdivisions (i) and (ii) of this paragraph (b)(2).

Requirements for sale and leaseback transaction. If the property leased is fi- nanced by the lessee (or a related party of the leasee) in a sale and leaseback transaction, the lease will not qualify under section 168(f)(8) unless— (1) The term of the lessor’s purchase money obligation is coterminous with the term of the lease, and (2) The lessor’s obligation bears a reasonable rate of interest. For this purpose, a rate of interest shall be pre- sumed to be reasonable if, on the date the agreement is executed, it is within 3 percentage points of (i) the rate in ef- fect under section 6621, the prime rate in effect at any local commercial bank, or the most recent applicable rate de- termined by the Secretary under § 1.385–6 (e)(2)(i), or (ii) an arm’s-length rate as defined in § 1.482–2, or (iii) any rate between any two of the rates de- scribed by subdivisions (i) and (ii) of this paragraph (b)(2paragraph(b)(2).