All of the following could lead to a non-arm's-length transaction EXCEPT which?

• A. A relative selling to a relative
• B. A seller under pressure to sell
• C. A buyer lacking information
• D. A knowledgeable buyer and seller

Answer: (D)

Non-arm's-length deals occur when the parties aren’t truly independent or are influenced by relationships or circumstances that can skew price away from fair market value. Selling to a relative or a buyer lacking information can introduce incentives or misperceptions that distort value. A seller under pressure to sell also creates a urgency or concession that can lower the price. By contrast, a knowledgeable buyer and seller acting independently are essentially strangers in the market, negotiating based on market conditions and complete information, so the arrangement reflects fair market value. Therefore, the scenario with a knowledgeable buyer and seller would not lead to a non-arm's-length transaction.