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X agrees to sell Blackacre to Y for $100, but X also has the option to...

X agrees to sell Blackacre to Y for $100, but X also has the option to buy Blackacre back for $100 plus interest at 6%. Does X have gain? Is this really a "loan"?

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Answer #1

This is arrangement of loan because in real term there is no sales of Blackacre because in real terms there is no transfer of assets because Mr. X is Selling the Asset to Mr. Y and at $ 100 and again Mr. Y is leased back the same assets to Mr. X at same price so there .

This is pure case of loan against assets because the title of the assets is only change but user of the assets is same.

There is no Gain and loss to any party Either Mr. X or Mr. Y and this is a pure case of Loan because Mr. Y is charging the interest also on leased back asset to Mr. X @ 6%

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