Common use of Allocations with Respect to Transferor’s Interest Clause in Contracts

Allocations with Respect to Transferor’s Interest. Except where the Code otherwise requires (for example, in the case of certain “allocable cash basis items” as defined in Code section 706(d)(2)(B)), upon the permitted transfer of a Stockholder’s interest in the Company, each item of income, loss, and deduction allocable to the transferred interest shall be pro rated between the transferor and the transferee on the basis of the number of days in the taxable year of the Company preceding (and including) and succeeding the date as of which the assignment is effective. Gain or loss from the sale or other taxable disposition of a capital asset shall be allocated to the persons who were Stockholders at the time such gain or loss was recognized by the Company, unless otherwise provided herein.