New Regulation Offers Basis Step-Up for Non-Corporate Acquirers

According to a recent article from McGladrey LLP, the U.S. Treasury and the IRS have finally published new regulations under 336(e) that will expand the option for basis step-up, treating the acquisition of stock as a purchase of assets. Previously, this option was available only to corporations. Now, non-corporate acquirers such as Limited Liability Companies and flow-through entities may elect these options.

Now that a corporate acquirer or the creation of a corporate acquisition vehicle is not necessary, this allows private equity funds to make an acquisition with a basis step-up and tax shield against future taxable income. The new regulations under section 336(e) apply to any qualified stock transaction occurring on or after May 15, 2013.

The full article from McGladrey can be found here.