Safe Harbor

Filed Under » ,
Dictionary Says

Definition of 'Safe Harbor'

1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated.

2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. In effect, this gives the target company a "safe harbor."

3. An accounting method that avoids legal or tax regulations and allows for a simpler method (usually) of determining a tax consequence than those methods described by the precise language of the tax code.
Investopedia Says

Investopedia explains 'Safe Harbor'

1. In the first case, under SEC rules, safe-harbor provisions protect management from liability for making financial projections and forecasts made in good faith.

2. When trying to scare away sharks, it sometimes helps to stink up the water.

3. Here's an example of an accounting safe harbor: a firm is losing money and therefore cannot claim an investment credit, so it transfers this claim to a company that is profitable and can therefore claim the credit. Then the profitable company leases the asset back to the unprofitable company and passes on the tax savings.

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Hedge Clause

    A provision ...
  2. Shark Repellent

    Slang term for ...
  3. Tax Credit

    An amount of ...
  4. Target Firm

    A company which ...
  5. Hostile Takeover

    The acquisition ...
  6. Liability

    A company's ...
  7. Shark Watcher

    A firm ...
  8. Lobster Trap

    A strategy used ...
  9. Black Knight

    A company that ...
  10. White Knight

    A white knight ...

Articles Of Interest

  1. Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  2. The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  3. The Advantages Of Investing In Aggressive Companies

    Often the most attractive companies are also a little fierce - learn how to spot healthy corporate aggression.
  4. Can Earnings Guidance Accurately Predict The Future?

    Explore the controversies surrounding companies commenting on their forward-looking expectations.
  5. Advanced Financial Statement Analysis

    Learn what it means to do your homework on a company's performance and reporting practices before investing.
  6. The Impact Of Combining The U.S. GAAP And IFRS

    The convergence of accounting standards is changing the attitudes of CPAs and CFOs toward harmonization of international accounting.
  7. Analyze Cash Flow The Easy Way

    Find out how to analyze the way a company spends its money to determine whether there will be any money left for investors.
  8. Digging Into Book Value

    This calculation will serve up your portion of the shareholder pie.
  9. CPA, CFA Or CFP® - Pick Your Abbreviation Carefully

    A couple of letters can mean a big difference. Find out which designation you need and how to get it.
  10. Using Enterprise Value To Compare Companies

    Learn how enterprise value can help investors compare companies with different capital structures.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center