Company: SDHC
Filing Date: 2025-04-23
Form Type: DEF 14A
Source: 0001982518-25-000012
Chunk: 55

Company: Smith Douglas Homes Corp.
Filing Date: 2025-04-23
Form: DEF 14A
Chunk 55
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iable or amortizable assets of Smith Douglas Holdings LLC at the time of each redemption, exchange, or distribution (or deemed distribution) as well as the amount of remaining existing tax basis at the time of such redemption, exchange, or distribution (or deemed distribution);

• the price of shares of our Class A common stock at the time of the purchases from the Continuing Equity Owners in connection with any applicable redemptions or exchanges —Basis Adjustments, as well as any related increase in any tax deductions, are directly related to the price of shares of our Class A common stock at the time of such purchases or future redemptions or exchanges;

• the extent to which redemptions or exchanges are taxable —if a redemption or exchange is not taxable for any reason, increased tax deductions will not be available;

• the extent to which such Basis Adjustments are immediately deductible —we may be permitted to immediately expense a portion of the Basis Adjustments (e.g., Basis Adjustments related to certain property and equipment that may be subject to accelerated depreciation methods) attributable to a redemption or exchange, which could significantly accelerate the timing of our realization of the associated tax benefits. Under the Smith Douglas LLC Agreement, the determination of whether to immediately expense such Basis Adjustments will be made in our sole discretion; and

• the amount and timing of our income —the Tax Receivable Agreement generally requires us to pay 85% of the tax benefits as and when those benefits are treated as realized under the terms of the Tax Receivable Agreement. If we do not have sufficient taxable income to realize any of the applicable tax benefits, we generally are not required (absent a material breach of a material obligation under the Tax Receivable Agreement, change of control, or other circumstances requiring an early termination payment) to make payments under the Tax Receivable Agreement for that taxable year because no tax benefits will have been actually realized. However, any tax benefits that do not result in realized tax benefits in a given taxable year may generate tax attributes that may be utilized to generate tax benefits in previous or future taxable years. The utilization of any such tax attributes results in payments under the Tax Receivable Agreement.

For purposes of the Tax Receivable Agreement, cash savings in income tax are computed by comparing our actual income tax liability to the amount of such taxes that we would have been required to pay had there been no Basis Adjustments, Section 704(c) Allocations or additional tax benefits to us as a result of any payments made under the Tax Receivable Agreement; provided that, for purposes