Book Allocation of Net Income and Net Loss. (a) Except as otherwise provided in Section 4.2(b) through (h), Net Income and Net Loss shall be allocated to the Members in proportion to their respective Percentage Shares.
(b) If there is a net decrease in Company Minimum Gain during a Company taxable year, each Member shall be specially allocated items of income and gain for such year (and, if necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the portion of such Member’s share of the net decrease in Company Minimum Gain during such year (which share of such net decrease shall be determined under Treasury Regulation Section 1.704-2(g)(2)). It is intended that this Section 4.2(b) shall constitute a “minimum gain chargeback” described in Treasury Regulation Section 1.704-2.
(c) If there is a net decrease during a Company taxable year in the Minimum Gain Attributable to a Member Nonrecourse Debt (as determined under Treasury Regulation Section 1.704-2(i)(3)), any Member with a share of Minimum Gain Attributable to such Member Nonrecourse Debt at the beginning of such year shall be specially allocated items of income and gain for such year (and, if necessary, for subsequent years) in proportion to, and to the extent of, an amount equal to the portion of such Member’s share of the net decrease in Minimum Gain Attributable to such Member Nonrecourse Debt (as determined under Treasury Regulation Section 1.704-2(g)(2)), during such year. It is intended that this Section 4.2(c) shall constitute a “minimum gain chargeback” described in Treasury Regulation Section 1.704-2(i)(4).
(d) Items of Company loss, deduction or Section 705(a)(2)(B) Expenditure that is attributable to a Member Nonrecourse Debt (“Member Nonrecourse Deductions”) shall be allocated among the Members who bear the Economic Risk of Loss for such Member Nonrecourse Debt. This provision is to be interpreted in a manner consistent with the requirements of Treasury Regulation Section 1.704-2(i)(l).
(e) The Nonrecourse Deductions for each taxable year of the Company shall be allocated among the Members in accordance with their respective Percentage Shares.
(f) In the event that any Member unexpectedly receives any adjustments, allocations or Distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specifically allocated to such Member in an amount and manner sufficient to eliminate, to the exten...
Book Allocation of Net Income and Net Loss
