Common use of Sale and leaseback arrangement Clause in Contracts

Sale and leaseback arrangement. (i) Where the leased property is pur- chased, directly or indirectly, by the lessor from the lessee (or a party re- lated to the lessee), the property will not be qualified leased property unless the property was (or would have been) new section 38 property of the lessee and was purchased and leased no later than 3 months after the date the prop- erty was placed in service by the lessee (or prior to November 14, 1981, if the property was placed in service by the lessee after December 31, 1980 and be- fore August 14, 1981) and with respect to which the lessor’s adjusted basis does not exceed the adjusted basis of the lessee (or a party related to the les- see) at the time of the lease. If the les- sor’s adjusted basis in the property ex- ceeds the seller’s adjusted basis with respect to the property at the begin- ning of the lease, the property will not be qualified leased property.