A technicality that allows a person or business to avoid the scope of a law or restriction without directly violating the law. Used often in discussions of taxes and their avoidance, loopholes provide ways for individuals and companies to remove income or assets from taxable situations into ones with lower taxes or none at all.

Loopholes are most prevalent in complex business deals involving tax issues, political issues and legal statutes. They can be found within contract details, building codes, tax codes, among others.

A person or company utilizing a loophole isn't considered to be breaking the law, but circumventing it in a way that was not intended by the regulators or legislators that put the law or restriction into place. Most loopholes will close in time, as those who have the power to do so rewrite the rules to cut off the opportunity for loophole advantage. Some tax loopholes exist perennially, especially in nations like the United States where the intricate tax code amounts to tens of thousands of pages - which can lead to many opportunitoes for those seeking to exploit it.

Investment dictionary. . 2012.

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  • loophole — I noun alternative, aperture, contrivance, device, escape clause, escape hatch, escape valve, evasion, exception, excuse, expedient, foramen, means of escape, mechanism for evasion, opening, outlet, saving clause, uncommunicativeness, vehicle for …   Law dictionary

  • Loophole — Loop hole , n. 1. (Mil.) A small opening, as in the walls of fortification, or in the bulkhead of a ship, through which small arms or other weapons may be discharged at an enemy. [1913 Webster] 2. A hole or aperture that gives a passage, or the… …   The Collaborative International Dictionary of English

  • loophole — (n.) also loop hole, mid 15c., from M.E. loupe opening in a wall for shooting through or admitting light (c.1300), perhaps related to M.Du. lupen to watch, peer; + HOLE (Cf. hole) (n.). Figurative sense of outlet, means of escape is from 1660s …   Etymology dictionary

  • loophole — [n] escape alternative, escape clause, means of escape, outlet, technicality, way out; concept 102 …   New thesaurus

  • loophole — ► NOUN 1) an ambiguity or inadequacy in the law or a set of rules. 2) an arrow slit in a wall. ORIGIN from obsolete loop «embrasure» + HOLE(Cf. ↑holey) …   English terms dictionary

  • loophole — [lo͞op′hōl΄] n. [ LOOP2 + HOLE] 1. a hole or narrow slit in the wall of a fort, etc., for looking or shooting through 2. a means of escape; esp., a means of evading or escaping an obligation, enforcement of a law or contract, etc …   English World dictionary

  • loophole — n. 1) to find a loophole 2) to close a loophole 3) a tax loophole 4) a loophole in * * * [ luːphəʊl] a tax loophole a loophole in to close a loophole to find a loophole …   Combinatory dictionary

  • loophole — noun ADJECTIVE ▪ legal, security, tax ▪ big, gaping, glaring, huge ▪ the gaping loopholes in our gun laws …   Collocations dictionary

  • Loophole — A loophole is a weakness or exception that allows a system, such as a law or security, to be circumvented or otherwise avoided. Loopholes are searched for and used strategically in a variety of circumstances, including taxes, elections, politics …   Wikipedia

  • loophole — A technicality in some legislation or regulation that makes it possible to avoid certain consequences or circumvent a rule without breaking the law, such as in the use of a tax shelter. Bloomberg Financial Dictionary * * * loophole loop‧hole… …   Financial and business terms

  • loophole — UK [ˈluːpˌhəʊl] / US [ˈlupˌhoʊl] noun [countable] Word forms loophole : singular loophole plural loopholes something that has been left out of a law or legal document that people can use to avoid obeying it He exploited a legal loophole in order… …   English dictionary

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