This is a transaction between persons who were not dealing with each other at arm's length at the time of the transaction.
Non-arm's length transactions include transactions between people who are related, such as members of a family, or anyone connected by blood relationship, marriage, or adoption (legal or in fact).
An example of a non-arm's length transaction would be the sale of property between a husband and wife, or a parent and child.
However, a non-arm's length relationship might also exist between unrelated individuals, partnerships, or corporations, depending on the circumstances. For more information, see Arm's length.