Incestuous Dealing

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DEFINITION

The dealing of securities among multiple parties, in order to create advantageous financial benefits for one or more of the parties involved. Incestuous dealing typically involves two or more parties and is done with the intention to create a tax benefit, through the trading of securities. Although the dealings may not be illegal in any way, it still may be considered dishonest or a way of skirting taxation.

INVESTOPEDIA EXPLAINS

Incestuous dealing may also be a legitimate practice, if the dealing of securities is done in a way in which the tax benefits are created as a function of genuine practices, rather than for the sole intent of creating a taxable benefit through opportune trading. Although not uncommon, tax officials are always watching for situations of incestuous dealings between firms.



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