Common use of Federal Income Tax Matters Clause in Contracts

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it It is the intent of the Depositor and the Servicer Ford Credit that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership disregarded entity that is 100% owned by the Depositor, and the Certificateholders and that the Depositor in turn will be a disregarded entity that is 100% owned Ford Credit. Accordingly, for so long as the Depositor owns 100% of the Certificates, each class of Notes is intended to be treated as partners in that partnershipindebtedness of Ford Credit. The Depositor and Ford Credit hereby agrees agree and the Certificateholders Noteholders by acceptance of a Certificate Notes will agree in the Indenture to such treatment and each agrees to take no action inconsistent with such treatment. For In the event that (i) one or more classes of Notes is recharacterized as an equity interest, and not as indebtedness of the Depositor, or (ii) the Certificates are not 100% owned by the Depositor, the parties intend that the Trust be characterized as a partnership, in the case of (i) above, between the Certificateholder and the holders of such class or classes of Notes (the "Recharacterized Classes"), or in the case of (ii) above, among the Certificateholders and the Depositor. In that event, for purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid as interest to holders of any Certificateholder pursuant to Section 5.2(a)(i) Recharacterized Class or Certificate Interest shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among to the Certificateholders holders of each Recharacterized Class of Certificates and/or Certificate as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up equal to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for interest accrued to such Class or Certificates for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate initial Note Balance of such Class and/or Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of the Notes of such Class of or Certificates and (iii) any amount expected to be distributed to the Certificateholders holders of such Class of Securities pursuant to Sections 4.6(c) and (d) Section 4.6 of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders holders of the Notes of such Recharacterized Class or Certificates (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to each Recharacterized Class or the Certificates in alphabetical order to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated first among the Certificateholders holders of the Certificates until the principal amount thereof is reduced to zero and thereafter to each Recharacterized Class (in reverse alphabetical order, in each case, until the principal balance of such Recharacterized Class is reduced to zero) as of the Record Date occurring within such month month, and among the Certificates or each Recharacterized Class, in proportion to their ownership of the Aggregate Certificate Balance aggregate principal balance of the Certificates or such Recharacterized Class on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor Depositor, the Certificateholders or the Certificateholders holders of a Recharacterized Class or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and partnership, the Certificateholders and the Depositor will be treated as partners in that partnership, and the payments to the Certificateholders at the Class B Rate (and for the Closing Date, any excess of the aggregate Initial Certificate Balance of the Certificates over their aggregate issue price) will be treated as "guaranteed payments," within the meaning of Section 707(c) of the Code. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state State and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C B Certificate Interest or Accrued Class D Certificate Interest, (to the extent not otherwise includable as applicable, for such Class a guaranteed payment for such month), (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of the Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph otherwise includable as a guranteed payment on the Closing Date), (b)iii) prepayment premium payable to the extent necessary to reverse Certificateholders for such month and (iv) any net loss previously allocated to Certificateholders other amounts of such Class (income payable to the extent not previously reversed pursuant to this clause (iii))Certificateholders for such month; and (cb) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (ba) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (cb) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," Depositor is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor Trust is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders Certificateholders, or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state State and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal incomein come, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state State and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders Certificate- holders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it It is the intent of the Depositor and the Servicer Ford Credit that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership disregarded entity that is 100% owned by the Depositor, and the Certificateholders and that the Depositor in turn will be a disregarded entity that is 100% owned Ford Credit. Accordingly, for so long as the Depositor owns 100% of the Certificates, each class of Notes is intended to be treated as partners in that partnershipindebtedness of Ford Credit. The Depositor and Ford Credit hereby agrees agree and the Certificateholders Noteholders by acceptance of a Certificate Notes will agree in the Indenture to such treatment and each agrees to take no action inconsistent with such treatment. For In the event that (i) one or more classes of Notes is recharacterized as an equity interest, and not as indebtedness of the Depositor, or (ii) the Certificates are not 100% owned by the Depositor, the parties intend that the Trust be characterized as a partnership, in the case of (i) above, between the Certificateholder and the holders of such class or classes of Notes (the "Recharacterized Classes"), or in the case of (ii) above, among the Certificateholders and the Depositor. In that event, for purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid as interest to holders of any Certificateholder pursuant to Section 5.2(a)(i) Recharacterized Class or Certificate Interest shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among to the Certificateholders holders of each Recharacterized Class of Certificates and/or Certificate as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up equal to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for interest accrued to such Class or Certificates for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate initial Note Balance of such Class and/or Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of the Notes of such Class of or Certificates and (iii) any amount expected to be distributed to the Certificateholders holders of such Class of Securities pursuant to Sections 4.6(c) and (d) Section 4.6 of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders holders of the Notes of such Recharacterized Class or Certificates (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to each Recharacterized Class or the Certificates in alphabetical order to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated first among the Certificateholders holders of the Certificates until the principal amount thereof is reduced to zero and thereafter to each Recharacterized Class (in reverse alphabetical order, in each case, until the principal balance of such Recharacterized Class is reduced to zero) as of the Record Date occurring within such month month, and among the Certificates or each Recharacterized Class, in proportion to their ownership of the Aggregate Certificate Balance aggregate principal balance of the Certificates or such Recharacterized Class on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor Depositor, the Certificateholders or the Certificateholders holders of a Recharacterized Class or as otherwise required by the Code.. ARTICLE III

Federal Income Tax Matters. The Certificateholders Cetificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor Deposi- tor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state State and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders Certificate holders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it It is the intent of the Depositor Deposi tor and the Servicer Ford Credit that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership disregarded entity that is 100% owned by the Depositor, and the Certificateholders and that the Depositor in turn will be a disregarded entity that is 100% owned Ford Credit. Accordingly, for so long as the Depositor owns 100% of the Certificates, each class of Notes is intended to be treated as partners in that partnershipindebtedness of Ford Credit. The Depositor and Ford Credit hereby agrees agree and the Certificateholders Noteholders by acceptance accep tance of a Certificate Notes will agree in the Indenture to such treatment and each agrees to take no action inconsistent with such treatment. For In the event that (i) one or more classes of Notes is recharacterized as an equity interest, and not as indebtedness of the Depositor, or (ii) the Certificates are not 100% owned by the Depositor, the parties intend that the Trust be characterized as a partnership, in the case of (i) above, between the Certificateholder and the holders of such class or classes of Notes (the "Recharacterized Classes"), or in the case of (ii) above, among the Certificateholders and the Depositor. In that event, for purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid as interest to holders of any Certificateholder pursuant to Section 5.2(a)(i) Recharacterized Class or Certificate Interest shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among to the Certificateholders holders of each Recharacterized Class of Certificates and/or Certificate as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up equal to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for interest accrued to such Class or Certificates for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate initial Note Balance of such Class and/or Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of the Notes of such Class of or Certificates and (iii) any amount expected to be distributed to the Certificateholders holders of such Class of Notes or Certificates pursuant to Sections 4.6(c) and (d) Section 4.6 of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders holders of the Notes of such Recharacterized Class or Certificates (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to each Recharacterized Class or the Certificates in alphabetical order to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated first among the Certificateholders holders of the Certificates until the principal amount thereof is reduced to zero and thereafter to each Recharacterized Class (in reverse alphabetical order, in each case, until the principal balance of such Recharacterized Class is reduced to zero) as of the Record Date occurring within such month month, and among the Certificates or each Recharacterized Class, in proportion to their ownership of the Aggregate Certificate Balance aggregate principal balance of the Certificates or such Recharacterized Class on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor Depositor, the Certificateholders or the Certificateholders holders of a Recharacterized Class or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it It is the intent of the Depositor and the Servicer Ford Credit that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership disregarded entity that is 100% owned by the Depositor, and the Certificateholders and that the Depositor in turn will be a disregarded entity that is 100% owned Ford Credit. Accordingly, for so long as the Depositor owns 100% of the Certificates, each class of Notes is intended to be treated as partners in that partnershipindebtedness of Ford Credit. The Depositor and Ford Credit hereby agrees agree and the Certificateholders Noteholders by acceptance of a Certificate Notes will agree in the Indenture to such treatment and each agrees to take no action inconsistent with such treatment. For In the event that (i) one or more classes of Notes is recharacterized as an equity interest, and not as indebtedness of the Depositor, or (ii) the Certificates are not 100% owned by the Depositor, the parties intend that the Trust be characterized as a partnership, in the case of (i) above, between the Certificateholder and the holders of such class or classes of Notes (the "Recharacterized Classes"), or in the case of (ii) above, among the Certificateholders and the Depositor. In that event, for purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid as interest to holders of any Certificateholder pursuant to Section 5.2(a)(i) Recharacterized Class or Certificate Interest shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among to the Certificateholders holders of each Recharacterized Class of Certificates and/or Certificate as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up equal to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for interest accrued to such Class or Certificates for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate initial Note Balance of such Class and/or Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of the Notes of such Class of or Certificates and (iii) any amount expected to be distributed to the Certificateholders holders of such Class of Notes or Certificates pursuant to Sections 4.6(c) and (d) Section 4.6 of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders holders of the Notes of such Recharacterized Class or Certificates (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to each Recharacterized Class or the Certificates in alphabetical order to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated first among the Certificateholders holders of the Certificates until the principal amount thereof is reduced to zero and thereafter to each Recharacterized Class (in reverse alphabetical order, in each case, until the principal balance of such Recharacterized Class is reduced to zero) as of the Record Date occurring within such month month, and among the Certificates or each Recharacterized Class, in proportion to their ownership of the Aggregate Certificate Balance aggregate principal balance of the Certificates or such Recharacterized Class on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor Depositor, the Certificateholders or the Certificateholders holders of a Recharacterized Class or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor Depositor, and the Servicer that, for purposes of federal Federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated either as a partnership "nonentity" under Treas. Reg. Section 301.7701-3 or as a partnership, and the Certificateholders and (including the Depositor Depositor) will be treated as partners in that partnership. The Depositor hereby agrees and the other Certificateholders by acceptance of a Certificate agree to such treatment and each agrees agree to take no action inconsistent with such treatment. For purposes of federal incomeFederal, state and local income and franchise tax and any all other income taxes tax purposes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal Federal income tax purposes shall be allocated among the Certificateholders of each Class of Certificates as of the first Record Date occurring within following the end of such month, in proportion to their ownership of the Aggregate aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Certificateholders' Monthly Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) thirty (30) days' interest on the excess, if any, of the Accrued Certificate Interest for the preceding Payment Date over the amount in respect of interest that is actually deposited in the Certificate Distribution Account on such preceding Payment Date, to the extent permitted by law, at the Certificate Rate, (iii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of the Certificates over the their initial aggregate issue price of such Class of Certificates and (iiiiv) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections Section 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)clause) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iiiiv)); and; (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal Federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof; and (d) any other provision of this Agreement to the contrary notwithstanding, the Depositor shall be allocated no less than 2% of each item of income, gain, credit, loss and deduction (which allocation shall be made only to the extent the other allocations of this Section 2.11 are insufficient to provide for such 2% allocation for such month). If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal Federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," Depositor and Certificateholder, is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the first Record Date occurring within following the end of such month in proportion to their ownership of the Aggregate aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or Depositor, the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state State and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders Certificate-holders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates 14 and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it is the intent of the Depositor and the Servicer that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership and the Certificateholders and the Depositor will be treated as partners in that partnership. The Depositor hereby agrees and the Certificateholders by acceptance of a Certificate agree to such treatment and each agrees to take no action inconsistent with such treatment. For purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid to any Certificateholder pursuant to Section 5.2(a)(i5.2(a) (i) shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among the Certificateholders of each Class of Certificates as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for such Class for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of such Class of Certificates and (iii) any amount expected to be distributed to the Certificateholders of such Class pursuant to Sections 4.6(c) and (d) of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders of such Class (to the extent not previously reversed pursuant to this clause (iii)); and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated among the Certificateholders as of the Record Date occurring within such month in proportion to their ownership of the Aggregate Certificate Balance on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor or the Certificateholders or as otherwise required by the Code.

Federal Income Tax Matters. The Certificateholders acknowledge that it is their intent and that they understand it It is the intent of the Depositor and the Servicer Ford Credit that, for purposes of federal income, state and local income and franchise tax and any other income taxes, the Trust will be treated as a partnership disregarded entity that is 100% owned by the Depositor, and the Certificateholders and that the Depositor in turn will be a disregarded entity that is 100% owned Ford Credit. Accordingly, for so long as the Depositor owns 100% of the Certificates, each class of Notes is intended to be treated as partners in that partnershipindebtedness of Ford Credit. The Depositor and Ford Credit hereby agrees agree and the Certificateholders Noteholders by acceptance of a Certificate Notes will agree in the Indenture to such treatment and each agrees to take no action inconsistent with such treatment. For In the event that (i) one or more classes of Notes is recharacterized as an equity interest, and not as indebtedness of the Depositor, or (ii) the Certificates are not 100% owned by the Depositor, the parties intend that the Trust be characterized as a partnership, in the case of (i) above, between the Certificateholder and the holders of such class or classes of Notes (the "Recharacterized Classes"), or in the case of (ii) above, among the Certificateholders and the Depositor. In that event, for purposes of federal income, state and local income and franchise tax and any other income taxes each month: (a) amounts paid as interest to holders of any Certificateholder pursuant to Section 5.2(a)(i) Recharacterized Class or Certificate Interest shall be treated as a guaranteed payment within the meaning of Section 707(c) of the Code; (b) to the extent the characterization provided for in paragraph (a) of this Section 2.11 is not respected, gross ordinary income of the Trust for such month as determined for federal income tax purposes shall be allocated among to the Certificateholders holders of each Recharacterized Class of Certificates and/or Certificate as of the Record Date occurring within such month, in proportion to their ownership of the Aggregate Certificate Balance on such date, in an amount up equal to the sum of (i) the Accrued Class C Certificate Interest or Accrued Class D Certificate Interest, as applicable, for interest accrued to such Class or Certificates for such month, (ii) the portion of the market discount on the Receivables accrued during such month that is allocable to the excess, if any, of the aggregate initial Note Balance of such Class and/or Initial Certificate Balance of such class of Certificates over the initial aggregate issue price of the Notes of such Class of or Certificates and (iii) any amount expected to be distributed to the Certificateholders holders of such Class of Securities pursuant to Sections 4.6(c) and (d) Section 4.6 of the Sale and Servicing Agreement (to the extent not previously allocated pursuant to this paragraph (b)) to the extent necessary to reverse any net loss previously allocated to Certificateholders holders of the Notes of such Recharacterized Class or Certificates (to the extent not previously reversed pursuant to this clause (iii)); and and (c) thereafter all remaining net income of the Trust (subject to the modifications set forth below) for such month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor, to the extent thereof. If the gross ordinary income of the Trust for any month is insufficient for the allocations described in paragraph (b) above, subsequent gross ordinary income shall first be allocated to each Recharacterized Class or the Certificates in alphabetical order to make up such shortfall before any allocation pursuant to paragraph (c) above. Net losses of the Trust, if any, for any month as determined for federal income tax purposes (and each item of income, gain, credit, loss or deduction entering into the computation thereof) shall be allocated to the Depositor to the extent the Depositor, in its capacity as "general partner," is reasonably expected to bear the economic burden of such net losses, and any remaining net losses shall be allocated first among the Certificateholders holders of the Certificates until the principal amount thereof is reduced to zero and thereafter to each Recharacterized Class (in reverse alphabetical order, in each case, until the principal balance of such Recharacterized Class is reduced to zero) as of the Record Date occurring within such month month, and among the Certificates or each Recharacterized Class, in proportion to their ownership of the Aggregate Certificate Balance aggregate principal balance of the Certificates or such Recharacterized Class on such Record Date. The Depositor is authorized to modify the allocations in this paragraph if necessary or appropriate, in its sole discretion, for the allocations to fairly reflect the economic income, gain or loss to the Depositor Depositor, the Certificateholders or the Certificateholders holders of a Recharacterized Class or as otherwise required by the Code.