Arm's Length Transaction

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Arm's Length Transaction

A transaction in which the buyer and the seller have no significant, prior relationship. In an arm's length transaction, neither party has an incentive to act against his/her own interest. That is, the seller seeks to make the price as high as he/she can, and likewise the buyer seeks to make it as low as he/she can. The negotiations for an arm's length transaction result in the arm's length price, which is almost always close to the market value of the asset being sold. The term is often used in real estate transactions because family members often sell property to each other at something other than the arm's length price.
References in periodicals archive ?
The sales of the condominiums were Arm's Length Transactions and involved the following purchasers: 9109-7832 Quebec inc.
In the scope of arm's length transactions in November 2004, Redex acquired, for the price of $51, fifty and one half percent (50.
in the scope of an arm's length transaction, the commercial property located at 3601 St-Jacques West, in Montreal.
In other news, LaserMedia is pleased to announce that as of June 2, 1999, it intends to proceed, through arm's length transactions, with private placements of a total of 909,721 common shares of the Corporation at a price of $0.
These are arm's length transactions and are subject to shareholder and regulatory approval and the execution of formal documentation.
Considerable concern has been expressed about certain aspects of the new rules, including the authority accorded Revenue Canada to redetermine the nature of transactions out of step with typical arm's length transactions.
The "quantum or nature" of affected amounts may be adjusted, in the first case with reference to the terms or conditions that arm's length parties would have adopted, and in the second by substituting, for this analysis, the appropriate arm's length transaction.
The second main area of concern in subsection 247(2) is its adoption of a "tax benefit" test to determine whether the "quantum or nature" of amounts should be adjusted by substituting an arm's length transaction that achieves the same effect for that undertaken by the parties.
Another strategy, common to lenders in arm's length transactions, is to reduce the outstanding debt to a level jan can manage, stretch.
The team's work included analyzing hundreds of invoices for advertising on Gemstar's interactive programming guide (IPG) and demonstrating that the limited number of invoices executed as arm's length transactions were fundamentally different from the remaining invoices, for which there was no market justification.
47) Similarly, dispositions of property to an unrelated party within a reasonable period of time after such property is acquired from a related party are evidence of arm's length transactions.