What is meant by the term "arm’s length," and how do you see it as important...

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Accounting

What is meant by the term "arm’s length," and how do you see itas important in tax planning? In what ways can a stock redemptionbe classified? In a stock redemption, would corporate andnoncorporate shareholders have the same preference for taxtreatment? Explain your response.

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Answer Meanings of arms length The arms length principle ALP is the condition or the fact that the parties to a transactions are independent and on equal footing Such a transactions is known asarms length transaction It is used specifically in correct contract law to arrange an equitable agreement that will stand up to legal security even though the parties may have shared interests eg employeremployee or are too closely related to be seen as completely independent eg the parties have familial ties A transactions in which the buyers and sellers of a product act independently and See Answer

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