Common use of Tax avoidance Clause in Contracts

Tax avoidance. (i) In general. If, as of the agreement date, a significant difference between the marginal tax rates of the lessor and lessee can rea- sonably be expected at some time dur- ing the lease term, the agreement will be closely scrutinized and clear and convincing evidence will be required to establish that tax avoidance is not a principal purpose for providing increas- ing or decreasing rent. The term ‘‘marginal tax rate’’ means the per- centage determined by dividing one dollar into the amount of the increase or decrease in the Federal income tax liability of the taxpayer that would re- ▇▇▇▇ from an additional dollar of rental income or deduction.