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In tax law class we said that getting open transactions is highly unusual; there are sophisticated ways of estimating future revenues so a truly indeterminate stream of revenue is not likely. But I asked my professor what's an example of something that would qualify for open transaction status today. He did not have an answer.

Any ideas?

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Open transaction treatment is very rare because transactions structured completely openly are very rare. If they happen, it would be in an earn-out situation. For example, if you sell an asset in consideration for 10% of the revenues from the asset,to be paid to you until the time when the S&P 500 index reaches 28,000 - you may get an open transaction since neither the time nor the amount of consideration may be determined at the time of sale.

As I said, it rarely happens. In most earn-out cases, there are pre-determined ceilings on on either the amount ("to a maximum of $XM"), or the time ("until the earlier of the S&P Target Date or the 5-year anniversary of the sale") or both.

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