loophole

noun loop·hole \ ˈlüp-ˌhōl \

Updated on: 13 Oct 2017

Definition of loophole

1 a :a small opening through which small arms may be fired

b :a similar opening to admit light and air or to permit observation

2 :a means of escape; especially :an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded

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Examples of loophole in a Sentence

She took advantage of a loophole in the tax law.
His attorney has been hunting for a loophole that would allow him to get out of the deal.
tried to close a loophole in the new legislation

Recent Examples of loophole from the Web

And scammers are getting smarter, finding loopholes in the site's system.

— taysha murtaugh, Country Living, "How to Spot a Scam on Amazon—Before It Costs You," 18 Aug. 2017
In an essay for The New York Review of Books, Michael Greenberg breaks down four aspects of the city’s current housing crisis: homelessness, rent stabilization loopholes, Mayor de Blasio’s housing plan, and alternatives for reform.

— catherine cusick, Longreads, "New York City’s Housing Emergency," 2 Aug. 2017
At least this exchange (somewhat) closes a plot loophole from Season 1.

— joanna robinson, HWD, "Game of Thrones: Answering 10 Burning Questions from “Stormborn”," 23 July 2017
But lax enforcement and a loophole that allows people keep bears as pets led to a boom in bile farming.

— jason daley, Smithsonian, "Vietnam Commits to Shut Down Bear Bile Farms," 22 July 2017
The groups, Grove Watch and the South Grove Neighborhood Association, uncovered erroneous approvals by city officials stratagems by developers to exploit regulatory loopholes.

— andres viglucci, miamiherald, "Tree-devouring “white boxes” invade lush Coconut Grove, and the locals revolt," 21 July 2017
After intense lobbying by the travel industry, on July 9th the Ministry of Justice (MoJ) announced plans to close this loophole.

— The Economist, "Holiday cons“Puke for payout”, the scam making holiday firms sick," 20 July 2017
But the freeze has a crucial loophole that allows pay increases for employees promoted into existing job classifications.

— david garrick, sandiegouniontribune.com, "San Diego creating more high-paying positions that critics call Prop. B loophole," 17 July 2017
According to regulators, the increase is caused by contractors that abuse AOB clauses and exploit legal loopholes.

— by andrea januta, miamiherald, "Wondering if your homeowner’s insurance will protect you? You’re not alone," 16 July 2017

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'loophole.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of loophole

¹loop

NEW! Time Traveler

First Known Use: 1591

See Words from the same year

Other Legal Terms

actionable, alienable, carceral, chattel, complicity, decedent, larceny, malfeasance, modus operandi

loophole

verb

Definition of loophole

transitive verb

:to make loopholes in

First Known Use of loophole

1664

Financial Definition of LOOPHOLE

loophole

noun

What It Is

A loophole is an exception that allows a system to be circumvented or avoided. It usually refers to legal, taxation, or security strategies that are exploited for personal gain.

How It Works

Loopholes are failures of a system to account for all conditions, variables, or exceptions. To illustrate a legal loophole, consider a local development law that requires even an unoccupied building to pay real estate taxes so long as it receives a certificate of completion. In order to avoid paying taxes, a builder may exploit this loophole and choose not to "complete" the building.

An example of a tax loophole is the tax break for small businesses who invest in "heavy vehicles". The tax break applies if the vehicle is used at least 50% of the time for the business. Business owners may exploit this loophole by upgrading their own vehicles to SUVs, which are considered "heavy" under the tax law, and thereby gain a personal financial advantage.

In most instances, loopholes that lead to excessive abuse are corrected by subsequent regulations and laws.

Why It Matters

While loopholes may save money or allow a purchase that would otherwise not be economical, the use of loopholes is considered questionable. Exploiting loopholes may lead to intensive scrutiny and audits, or even just a feeling of bad faith. For example, a tax payer should be aware when a tax consultant advises of specific tax advantage of whether the advantage is claimed on the basis of an allowable deduction or a loophole.

Source: Investing Answers