StepUp Deal Structurer

Know the tax cost of a deal before you sign.

For small business sales, roughly $1 million to $25 million, where the owner may not have a tax team on call. Compare structures side by side and get the number to negotiate with.

Example result

Enter the factsStart from a sample and change a number.
Get the answerOne recommendation and the figure that matters.
Check the mathEvery line, with its source, when you want it.

What the deal structurer covers

Built for the common small-deal cases, and clear about where it stops. Past that line, the details move the answer and a tax advisor should run it.

Covered

Sellers taxed as S corporations, C corporations, partnerships (multi-member LLCs), or single-member LLCs
Stock sales, asset sales, 338(h)(10) and 336(e) elections, F reorganizations, and LLC interest sales
Cash mergers, forward and reverse, mapped to the tax treatment they get
Price allocation across receivables, inventory, equipment, buildings, land, and goodwill, plus noncompete and personal goodwill paid to the owners
Rollover equity and seller notes
SBA 7(a) financing: the $5 million cap, the 10% equity injection, standby seller notes, and the guarantee that rules out most rollovers
Side-by-side offers before the letter of intent, with the tax terms to ask for
State pass-through entity tax elections and entity-level taxes, with presets for California, New York, New York City, and New Jersey

Flagged for an advisor

Deals above about $25 million
Mergers paid mostly in buyer stock (tax-free reorganizations) and exchanges into a buyer partnership
Tiered or corporate-owned sellers, foreign parties, and state apportionment
Net operating losses, built-in gains tax, qualified small business stock, and debt or working capital adjustments

Pick a situation

2Your answer

Stock-sale pricePrice added for the step-up

3Dig into the details

Compare all structures

Can it be financed? SBA 7(a) check

Cost to sellers against value to buyer

Each structure compared with a plain stock sale. A step-up is worth doing when the second bar is longer than the first.

Extra tax on sellers Value today of buyer's deductions

Break-even price

Buyer's gain from the best step-up structure after covering the sellers' extra tax, at different prices. Every added dollar of price is treated as goodwill.

Where the buyer's deductions come from

Check before relying on this

Issues the numbers do not settle. Triggered items come from this deal's facts.

The math, with authority

Every figure above, line by line, with the Code section or ruling it rests on.

What this mock leaves out

Built for small business sales, roughly $1 million to $25 million. Larger deals usually turn on details left out here.
Mergers paid mostly in buyer stock (tax-free reorganizations under section 368) and exchanges into a buyer partnership are flagged, not calculated.
Sellers are individuals. No tiered entities, corporate owners of an LLC, trusts, or foreign parties.
State tax uses one flat rate per side, plus an optional pass-through entity tax election and entity-level tax. No apportionment between states, local taxes other than New York City, or resident credits for taxes paid elsewhere.
No assumed debt, working capital adjustments, or deal costs. For an LLC, debt the buyer takes on would add to the members' amount realized.
An S corporation target has no built-in gains tax. Owners of S corporations and LLCs work in the business, so the 3.8% tax does not apply to them.
A C corporation target is owned by individuals, has no net operating losses, and liquidates right after an asset sale.
Equipment sells for less than it originally cost, so all its gain is depreciation recapture. All building gain is treated as unrecaptured section 1250 gain, taxed at up to 25%. Buildings are deducted over 39 years.
Partnership hot assets are limited to receivables, inventory, and equipment recapture. No special allocations, section 704(c) gain, or disguised sales.
Tax deferred by a rollover or a seller note is shown as not paid. Its later cost is not discounted back.
The buyer has enough income to use every deduction when it arises.

2Your answer

Before the letter of intent

Offers

Enter each offer as written. The company's facts, price allocation, state, and tax rates come from the deal inputs on the left, so every offer is taxed on the same facts.

3Dig into the details

Tax terms to ask for in the letter of intent

Once the letter is signed, asking for a gross-up or a different structure can look like re-trading the deal. Settle these first. Written for the offer that nets the most.

What each offer leaves you

Each headline price split into what the sellers keep, what goes to tax, and, with SBA financing, what a standby note gives up by waiting.

Kept, in today's dollars Tax

The math, offer by offer

2Your answer

Like-kind exchange, section 1031

3Dig into the details

Three tests for deferring all of it

Fail any one and part of the gain is taxed now. The taxed part is called boot.

Two deadlines that cannot move

Both run from the day the sale closes. Weekends and holidays do not extend them.

What stays invested

Your sale cash after the mortgage is paid off, split into what keeps working in real estate and what goes to tax this year.

Stays invested Paid in tax now

Check before relying on this

The rules that most often break an exchange. Triggered items come from the facts you entered.

The math, with authority

What this mock leaves out

The owner is an individual in the top brackets, holding a rental for more than a year, and the 3.8% tax applies to the whole gain.
The whole sale is real estate. Nothing is allocated to furniture or equipment.
One property is sold and one is bought, and the replacement closes inside the deadlines.
Deferred tax is shown as not paid. It comes due if the replacement is later sold in a taxable sale.