Common use of Basis Adjustment Attributable to an Exchange Clause in Contracts

Basis Adjustment Attributable to an Exchange. Pursuant to an Exchange, IBG Holdings shall sell and exchange a number of interests in IBG LLC to IBGI as necessary to provide IBG Holdings with consideration to give effect to any redemption of interests of the Members in IBG Holdings. The parties hereto acknowledge that (i) IBG Holdings will recognize taxable gain or loss on the Exchange for U.S. federal income tax purposes under Section 741 of the Code, and (ii) IBGI’s share of the basis in the Exchange Assets shall be increased by the excess, if any, of (A) adjusted basis in the interests in IBG LLC acquired by IBGI, adjusted to take into account the Imputed Principal of any Tax Benefit Payments as made by IBGI with respect thereto, over (B) IBGI’s proportionate share of the basis of the Exchange Assets immediately after the Exchange attributable to the IBG LLC interests exchanged. IBGI and IBG Holdings will treat such gain and basis adjustment as occurring entirely on the Exchange Date unless there is a Determination to the contrary.