loophole

noun loop·hole \ ˈlüp-ˌhōl \

|Updated on: 20 Jun 2018

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

But a loophole in state law could inadvertently shield anyone pardoned by the president from state prosecution.

— david klepper, The Seattle Times, "Capitol Watch: What’s left to do before lawmakers adjourn," 2 June 2018
Consumer advocates have warned that banks could exploit even a small loophole created by regulators.

— the washington post, OregonLive.com, "Federal Reserve scales back 'Volcker Rule' limits on bank trading," 30 May 2018
Although Ireland does regulate overseas donations to domestic campaigns, a loophole allows anyone to purchase Facebook ads urging Irish citizens to vote in a particular way.

— sarah jones, The New Republic, "How American Christians Are Swaying Ireland’s Abortion Referendum," 24 May 2018
In December, city leaders used a legal loophole by selling the city parks for $1,000 to a nonprofit, which swiftly removed the monuments under the cover of darkness.

— Washington Post, "Judge rules Confederate statues removal by Memphis is legal," 18 May 2018
City leaders used a legal loophole by selling the parks for $1,000 to a nonprofit, which swiftly removed the monuments.

— adrian sainz, Fox News, "Judge rules Confederate statues removal by Memphis is legal," 16 May 2018
The ability to give to a fund, receive a tax benefit, and not donate any of that money in your lifetime arose from a loophole in tax law.

— alana semuels, The Atlantic, "Where Silicon Valley Puts Its Money," 14 May 2018
Facing a new election year gun safety issue, Gov. Rick Scott urged state law enforcement officials Monday to seek federal aid to tackle a long-running gun-check loophole in Florida.

— steve bousquet, miamiherald, "Rick Scott wants federal grant to close loophole in background checks for gun buyers | Miami Herald," 14 May 2018
If all the facilities use the loophole to the maximum extent possible, that amount increases 146 percent, to a total of 450 tons, the report continues.

— alex stuckey, Houston Chronicle, "Air pollution in Houston/Galveston region could increase under EPA-created loophole, study finds," 10 Apr. 2018

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

in the meaning defined at sense 1a

See Words from the same year

Other Legal Terms

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

loophole

verb

Definition of loophole

loopholed; loopholing; loopholes

transitive verb

: to make loopholes in

First Known Use of loophole

1664

in the meaning defined above

See Words from the same year

NEW! Time Traveler

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