Step up

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Step up

To increase, as in step up the tax basis of an asset.

Step Up

1. Informal; to increase. For example, one's income may increase until one "steps up" into a higher marginal tax rate.

2. In convertible securities, a scheduled increase in the conversion price. Step-ups also apply to warrants and options. For example, if a shareholder owns convertible preferred stock at a conversion price of $10 per share, a step-up may involve an increase in the conversion price to $12 per share. The terms under which the security is sold outline the amount of the step-up and when it takes place. Because step-ups are contrary to the interest of buyers, there is little demand for securities with step-ups, and, as a result, they are a relatively rare feature of convertible securities.
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