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Related to step-up: step-up transformer

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.


A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock. For example, a warrant may permit its owner to purchase ten shares of stock at $20 per share up to a specified date and at $22.50 per share thereafter until the warrant expires. The step-up works to the disadvantage of the holder, however. It is not a feature of most of these securities.
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Where basis step-ups are claimed for an interest in a corporate entity, such step-ups will not result in any immediate tax benefits, but will only be utilized upon the ultimate disposition of such interests.
The regulations lack guidance on partnership goodwill, step-up of partnership basis and the application of the anti-churning rules.
To our knowledge, there is no consistent approach in corporate financial literature to value the tax shields of asset step-up based depreciations.
Although there are problems in determining and dealing with carryover basis, some of these problems can be avoided by providing a substantial allowance for step-up in income tax basis.
Although the retiree certainly can expect to receive a step-up and the median income flow does increase over time, there is at least a 25% chance that the policyholder will experience no step-ups during the first 10-12 years of the policy.
The big question is playing at that level, whether he can develop and adapt quick enough to really fire in the Premier League - but he's certainly managed the step-ups pretty well so far that should make him an exciting prospect next season.