In taxation, the Safe Harbor Rule provides guidelines established by the IRS for certain transactions, indicating specific parameters a taxpayer can observe to ensure favorable tax treatment or avoid an unfavorable one. An example is a list of parameters that, if followed, will assure sale and leaseback treatment rather than a financing arrangement.
A sale and leaseback transaction involves the owner of an asset selling it and then immediately leasing it back from the buyer. This allows the original owner to continue using the asset while freeing up capital.
