Buy-out payment

Tax Glossary Definition

Buy-out payment

Buy-out Payment – A payment made to acquire another party’s ownership stake or investment interest in a business, resulting in the transfer of control or equity to the purchaser. Such payments typically occur during mergers, acquisitions, or when one partner or shareholder decides to exit a joint venture or company.

Example: If one partner withdraws from a partnership, the continuing partner may make a buy-out payment to obtain complete ownership of the enterprise.

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