Disqualified leaseback or long-term agreement
(b) Disqualified leaseback or long-term agreement(1) In general. A leaseback (as defined in paragraph (b)(2) of this section) or a long-term agreement (as defined in paragraph (b)(3) of this section) is disqualified only if (i) A principal purpose for providing increasing or decreasing rent is the avoidance of Federal income tax (as described in paragraph (c) of this section); (ii) The Commissioner determines that, because of the tax avoidance purpose, the agreement should be treated as a disqualified leaseback or long-term agreement; and (iii) For section 467 rental agreements entered into before July 19, 1999, the amount determined with respect to the rental agreement under 1.467-1(c)(4) (relating to the exception for rental agreements involving total payments of $250,000 or less) exceeds $2,000,000. (2) Leaseback. A section 467 rental agreement is a leaseback if the lessee (or a related person) had any interest (other than a de minimis interest) in the property at any time during the two-year period ending on the agreement date. For this purpose, interests in property include options and agreements to purchase the property (whether or not the lessee or related person was considered the owner of the property for Federal income tax purposes) and, in the case of subleased property, any interest as a sublessor. (3) Long-term agreement(i) In general. A section 467 rental agreement is a long-term agreement if the lease term exceeds 75 percent of the property's statutory recovery period. (ii) Statutory recovery period(A) In general. The term statutory recovery period means