Company: SDHC
Filing Date: 2025-04-23
Form Type: DEF 14A
Source: 0001982518-25-000012
Chunk: 58

Company: Smith Douglas Homes Corp.
Filing Date: 2025-04-23
Form: DEF 14A
Chunk 58
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 the Tax Receivable Agreement. Please see Part I, Item 1A. Risk Factors — Risks Related to our Organizational Structure — In certain cases, payments under the Tax Receivable Agreement to the Continuing Equity Owners may be accelerated or significantly exceed any actual benefits we realize in respect of the tax attributes subject to the Tax Receivable Agreement of our 2024 Form 10-K for an overview of related risks.

Payments under the Tax Receivable Agreement are generally based on the tax reporting positions that we determine. We will not be reimbursed for any cash payments previously made to the Continuing Equity Owners pursuant to the Tax Receivable Agreement if any tax benefits initially claimed by us are subsequently challenged by a taxing authority and ultimately disallowed. Instead, any excess cash payments made by us to a Continuing Equity Owner will be netted against future cash payments, if any, we might otherwise be required to make under the terms of the Tax Receivable Agreement to such Continuing Equity Owner. However, a challenge to any tax benefits initially claimed by us may not arise for a number of years following the initial time of such payment or, even if challenged early, such excess cash payment may be greater than the amount of future cash payments, if any, we might otherwise be required to make under

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the terms of the Tax Receivable Agreement and, as a result, there might not be future cash payments from which to net against. The applicable U.S. federal income tax rules are complex and factual in nature, and there can be no assurance that the IRS or a court will not disagree with our tax reporting positions. As a result, it is possible we could make cash payments under the Tax Receivable Agreement that are substantially greater than our actual cash tax savings.

We have full responsibility for, and sole discretion over, all our tax matters, including the filing and amendment of all tax returns and claims for refund and defense of all tax contests, subject to certain participation and approval rights held by the Continuing Equity Owners. If the outcome of any challenge to all or part of the Basis Adjustments, Section 704(c) Allocations or other tax benefits we claim would reasonably be expected to adversely affect the rights and obligations of the Continuing Equity Owners in any material respect under the Tax Receivable Agreement, then we will not be permitted to settle such challenge without the consent (not to be unreasonably withheld or delayed) of the Continuing Equity Owners, as applicable. The interests of the Continuing Equity Owners in any such challenge may differ from or