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Statement No. 66 When the Agreement Includes a Buy-Sell Clause



1. The objective of this Issue is to clarify whether a buy-sell clause is a prohibited form of continuing involvement that would preclude partial sales treatment under Statement 66. All paragraphs in this Issue have equal authority. Paragraphs in bold set out the main principles. Background 2. When investors enter into an arrangement to create a jointly owned entity and one investor sells real estate to that entity, a buy-sell clause often is included in the agreement between the investors. The buy-sell clause is a contractual term that gives both of the investors of the jointly owned entity the ability to offer to buy the other investor's interest. In some cases, the buy-sell clause may be executed at any time or in other cases only at some specified future date. When an offer is made pursuant to the buy-sell clause, the recipient of the offer can elect to sell its interest for the offered amount or buy the offeror's interest at the offered amount. Generally, once an offer is made, the offeror is contractually required to buy the other investor's interest or sell its interest at th

Year: 2007
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