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arm's length
(redirected from Arm's Length Transaction)

    Also found in: Dictionary/thesaurus, Financial 0.01 sec.

arm's length adj. the description of an agreement made by two parties freely and independently of each other, and without some special relationship, such as being a relative, having another deal on the side or one party having complete control of the other. It becomes important to determine if an agreement was freely entered into to show that the price, requirements, and other conditions were fair and real. Example: if a man sells property to his son the value set may not be the true value since it may not have been an "arm's length" transaction. (See: contract)
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First, under IRC 2703 a buy-sell price between family members will be disregarded and the business will be estate-taxed at fair market value (FMV) unless the agreement meets the comparability test: a) it must be a bona fide business arrangement, b) it must not be a device to pass the business interest to members of the decedent's family for less than adequate consideration, and c) the terms must be comparable to similar arrangements made by unrelated parties in an arm's length transaction.
Three tax traps in a family-owned business. (Blue Chip Strategies) by Olearcek, Patrick F. / Franchising World
In this case, Insilco proved at trial that Star was insolvent at the time of the transfer, that the transfer was less than an arm's length transaction, made in bad faith, and that the consideration for the transfer was grossly inadequate.
Company can set aside property transfer under recent court decision by Real Estate Weekly
The court said there was no dispute that the Newman sale was the result of an arm's length transaction.
Island property determined under valued in light of an arm's length ... by Appraisal Journal
 
 
 
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