medium · Private Equity & LBOs
How does the 'Tax Amortization Benefit' (TAB) relate to the treatment of PIK interest in a Section 338(h)(10) transaction?
- The TAB is a separate calculation for intangibles and does not directly interact with PIK interest, though both affect the final cash tax expense
- The TAB must be used to pay off the PIK interest before it can be added to the principal
- The presence of PIK interest eliminates the ability to claim a TAB
- The PIK interest rate is added to the discount rate used to calculate the NPV of the TAB
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