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 classic literature ?
She handed the letter sternly, at arms-length, to her daughter.
482-2(b) cost safe harbor and to bring the existing rules more in line with the arms-length standard.
Each of Gateshead Council's 26,442 tenants and leaseholders will receive a questionnaire this week, asking if they want to support the setting up of an arms-length group to manage council housing in the future.
has entered into an arms-length agreement to acquire 100 per cent of the issued and outstanding shares of Heath & Sherwood Drilling Inc.
Moreover, to the extent the guidelines require the disclosure and measurement of returns for members that are not a party to a controlled transaction that is being tested for comparability under the arms-length principle, we question whether the documentation requirement is enforceable under the Canadian, U.
An owner is permitted to object to the proposed sale on several grounds including a claim that the price is too high or that the proposed sale is not a bona fide arms-length transaction.
tax treaty; (2) the related party is not a controlled foreign corporation; and (3) the amounts are also deductive for Federal income tax purposes and arranged through arms-length pricing.
At many companies, arms-length relationships are in place and parent companies can repatriate only dividends from overseas subsidiaries, says Ken Parkinson, a partner at Treasury Information Services in Hopewell, N.
Taxpayers do not purposefully set miles prices at a level higher than the arms-length price, or their cost of goods at a level below that price.
The federal and provincial finance ministers, in their role as stewards of the Plan, produced a carefully crafted governance framework that balances accountability with an ability to operate at arms-length from government.
16 (1994), that, in determining tax consequences, it would follow the express allocation of claims in a written settlement agreement if the parties reached the settlement as a result of "bona fide, arms-length, adversarial negotiations.