- 18 - leaseback or long-term agreement, or (B) such agreement does not provide for the allocation referred to in paragraph (1)(A). (4) DISQUALIFIED LEASEBACK OR LONG-TERM AGREEMENT.--For purposes of this subsection, the term "disqualified leaseback or long-term agreement" means any section 467 rental agreement if-- (A) such agreement is part of a leaseback transaction or such agreement is for a term in excess of 75 percent of the statutory recovery period for the property, and (B) a principal purpose for providing in- creasing rents under the agreement is the avoid- ance of tax imposed by this subtitle. (5) EXCEPTIONS TO DISQUALIFICATION IN CERTAIN CASES.--The Secretary shall prescribe regulations setting forth circumstances under which agreements will not be treated as disqualified leaseback or long-term agreements, including circumstances relating to-- (A) changes in amounts paid determined by reference to price indices, (B) rents based on a fixed percentage of lessee receipts or similar amounts, (C) reasonable rent holidays, or (D) changes in amounts paid to unrelated 3rd parties. The parties disagree over whether the lease agreement is a disqualified leaseback or long-term agreement described in section 467(b)(4).12 In advancing their respective positions 12 Respondent's primary position in the FPAA was that for 1988 Partnership was required to accrue rent under the lease agreement in an amount equal to 6.5 (viz, the number of months remaining in 1988 after the execution of the lease agreement on June 14, 1988) (continued...)Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Next
Last modified: May 25, 2011