Achieving Step-up in Basis of Assets in Taxable Stock Purchases of S-Corporations

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Course Information

Time 60 Minutes
Difficulty Intermediate
Topics covered in this course: Banking Tax

Course Description

Target companies in private equity and other acquisitions are often S-corporations. When these deals are structured as stock sales, buyers frequently want to achieve step-up in the basis of the target company’s assets. This course, presented by Julie Rhoades of Dickinson Wright’s tax practice, will discuss various strategies for achieving this basis step-up. Specifically, this course will review the availability of 338(h)(10) and 336(e) elections as well as the “drop-down LLC” structure, offer practical insight into how to choose among these strategies, and discuss the impact that these strategies could have on the business deal and purchase agreement terms.   

Learning Objectives:

  1. Identify the availability of various strategies for achieving asset basis step-up in taxable S corp acquisitions
  2. Weigh the pros and cons of available strategies based on the deal structure
  3. Draft appropriate reps and warranties to mitigate risk
  4. Assess how the use of strategies to achieve basis step-up may impact deal terms 

Credit Information

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Julie Rhoades

Dickinson Wright PLLC

Julie Rhoades represents clients on a broad range of federal income tax matters. In the private equity space, she advises private equity fund sponsors on the tax aspects of mergers and acquisitions and investment fund formation and operation. She has also represented non-U.S. institutional investors regarding the U.S. tax consequences of their investments into private equity and real estate funds. In the renewable energy arena, she has represented sponsors and investors in connection with solar and wind projects that generate federal tax credits, including the investment tax credit and production tax credit. Julie has experience representing chapter 11 debtors on the tax aspects of restructuring matters. In addition to her transactional practice, she advises exempt entities on organizational and operational tax issues.  

Before joining Dickinson Wright, Julie practiced in the Chicago offices of Kirkland & Ellis LLP and Winston & Strawn LLP. 

Community Involvement

  • University of Michigan Law School Class of 2012 Five-Year Reunion Committee, Co-Chair
  • Lookingglass Theatre Company (Chicago, IL), Associates Board Member, 2013-2017