Common use of Income Tax Allocations Clause in Contracts

Income Tax Allocations. (a) Except as provided in this Section 5.5, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book purposes under Sections 5.1 and 5.2. (b) The Members recognize that with respect to any property contributed to the Company, there may be a difference between the basis of the property to the Company for federal income tax purposes and its fair market value at the time of the contribution. In such case, all items of tax depreciation, cost recovery, amortization, and gain or loss with respect to such properties shall be allocated among the Members to take into account such disparities in accordance with the provisions of sections 704(b) and 704(c) of the Code and the Treasury Regulations under those sections. (c) For tax purposes, recapture of tax deductions arising out of a disposition of property shall, to the extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapture, be allocated to the Members in the same proportions as the recaptured deduction was originally allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 of the Code which may be made by the Company; provided, however, such allocations, once made, shall be adjusted as necessary or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the Code.

Income Tax Allocations. (a) Except as provided in this Section 5.54.4, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book Capital Account purposes under Sections 5.1 Section 4.1 and 5.2Section 4.2. (b) The Members recognize that with respect to any property contributed to the CompanyAdjusted Property, there may will be a difference between the basis Carrying Value of the such property to the Company for federal income tax purposes and its fair market value at the time of revaluation and the contributionadjusted tax basis of such property at the time. In such case, all All items of tax depreciation, cost recovery, amortization, amount realized and gain or loss with respect to such properties Adjusted Property shall be allocated among the Members to take into account the disparities between the Carrying Values and the adjusted tax basis with respect to such disparities properties in accordance with the provisions of sections Sections 704(b) and 704(c) of the Internal Revenue Code and the Treasury Regulations under those sections; provided, however, that any tax items not required to be allocated under Sections 704(b) or 704(c) of the Internal Revenue Code shall be allocated in the same manner as such gain or loss would be allocated for Capital Account purposes under Section 4.1 and Section 4.2. In making such allocations, the Board shall use such method or methods of allocation as it shall determine, in its absolute discretion, to be reasonable and in accord with the applicable Treasury Regulations. (c) For tax purposes, All recapture of income tax deductions arising out resulting from the Transfer of a disposition of Company property shall, to the maximum extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapturepossible, be allocated to the Members Member to whom the deduction that gave rise to such recapture was allocated hereunder to the extent that such Member is allocated any gain from the Transfer of such property. For this purpose, deductions that were allocated as a component of Net Profit or Net Loss shall be treated as if allocated in the same proportions manner as the recaptured deduction was originally allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 allocation of the Code which may be made by the Company; provided, however, such allocations, once made, shall be adjusted as necessary related Net Profit or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the CodeNet Loss.

Income Tax Allocations. (a) Except as provided in this Section 5.56.3, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated allocated, to the maximum extent possible, among the Members in the same manner as such the corresponding items (if any) are allocated for book purposes of maintaining Capital Accounts under Sections 5.1 and 5.2Section 6.2. (b) The Members recognize that with respect to any property contributed to the Company, there may be a difference between the Book Value of a Company asset and the asset’s adjusted tax basis of the property to the Company for federal income tax purposes and its fair market value at the time of the contributionproperty’s contribution or revaluation pursuant to this Agreement. In such a case, all items of tax depreciation, cost recovery, amortization, and gain or loss with respect to such properties asset shall be allocated among the Members to take into account the disparities between the Book Values and the adjusted tax basis with respect to such disparities properties in accordance with the provisions of sections Sections 704(b) and 704(c) of the Code and the Treasury Regulations under those sections; provided, that, (i) the Company shall account for any disparities relating to the contribution of property by MHR in the initial contribution of the assets of Eureka Hunter Pipeline and Eureka Hunter Land, LLC using the remedial method described in Treas. Reg. § 1.704-3(d), and (ii) the Company shall account for any disparities resulting from the Effective Date Transactions using the traditional method described in Treas. Reg. § 1.704-3(b). (c) For tax purposes, recapture of tax deductions arising out of a disposition of property shall, to the extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapture, be allocated to the Members in the same proportions as the recaptured deduction was originally allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 of the Code which may be made by the Company; provided, however, that such allocations, once made, shall be adjusted as necessary or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the Code. (d) If any deductions for depreciation, amortization or cost recovery are recaptured as ordinary income upon the sale or other disposition of Company properties, the ordinary income character of the gain from such sale or disposition shall be allocated among the Members in the same ratio as the deductions giving rise to such ordinary income character were allocated in accordance with Treasury Regulations § 1.1245-1. (e) The Members’ proportionate shares of the “excess nonrecourse liabilities” of the Company, within the meaning of Treasury Regulation Section 1.752-3(a)(3) shall be allocated to the holders of Units in accordance with their respective Percentage Interests. (f) Tax credits of the Company shall be allocated among the Members as provided in Treasury Regulation Sections 1.704-(b)(4)(iii) and 1.704-1(b)(4)(viii). (g) Allocations pursuant to this Section 6.3 are solely for purposes of federal, state, and local taxes and except as specifically provided shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, other items or distributions pursuant to any provision of this Agreement.

Income Tax Allocations. (a) Except as provided in this Section 5.5, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book purposes under Sections 5.1 and 5.2. (b) The Members recognize that with respect to any property contributed to the Company, there may be a difference between the basis of the property to the Company for federal income tax purposes and its fair market value at the time of the contribution. In such case, all items of tax depreciation, cost recovery, amortization, and gain or loss with respect to such properties shall be allocated among the Class B Members to take into account such disparities in accordance with the provisions of sections 704(b) and 704(c) of the Code and the Treasury Regulations under those sections. (c) For tax purposes, recapture of tax deductions arising out of a disposition of property shall, to the extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapture, be allocated to the Members in the same proportions as the recaptured deduction was originally allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Class B Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 of the Code which may be made by the Company; provided, however, such allocations, once made, shall be adjusted as necessary or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the Code.

Income Tax Allocations. (a) Except as provided in this Section 5.54.4, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book Capital Account purposes under Sections 5.1 4.1 and 5.24.2. (b) The Members recognize that that, with respect to any property contributed to the CompanyAdjusted Property, there may will be a difference between the basis Carrying Value of the such property to the Company for federal income tax purposes and its fair market value at the time of revaluation and the contributionadjusted tax basis of such property at the time. In such case, all All items of tax depreciation, cost recovery, amortization, amount realized and gain or loss with respect to such properties Adjusted Property shall be allocated among the Members to take into account the disparities between the Carrying Values and the adjusted tax basis with respect to such disparities properties in accordance with the provisions of sections Sections 704(b) and 704(c) of the Internal Revenue Code and the Treasury Regulations under those sections; provided, however, that any tax items not required to be allocated under Sections 704(b) or 704(c) of the Internal Revenue Code shall be allocated in the same manner as such gain or loss would be allocated for Capital Account purposes under Sections4.1 and 4.2. In making such allocations under Section 704(c) of the Internal Revenue Code, the Board shall use the remedial allocation method pursuant to Treasury Regulation Section 1.704-3(d). (ce) For tax purposes, All recapture of income tax deductions arising out resulting from the Transfer of a disposition of Company property shall, to the maximum extent consistent with the allocations for tax purposes of the gain or amount realized giving rise to such recapturepossible, be allocated to the Members Member to whom the deduction that gave rise to such recapture was allocated hereunder to the extent that such Member is allocated any gain from the Transfer of such property. For this purpose, deductions that were allocated as a component of Net Profit or Net Loss shall be treated as if allocated in the same proportions manner as the recaptured deduction was originally allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 allocation of the Code which may be made by the Company; provided, however, such allocations, once made, shall be adjusted as necessary related Net Profit or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the CodeNet Loss.

Income Tax Allocations. (a) Except as provided in this Section 5.56.3, each item of income, gain, loss and deduction of the Company for federal income tax purposes shall be allocated among the Members in the same manner as such items are allocated for book purposes under Sections 5.1 and 5.2Section 6.2. (b) The Members recognize that with respect to any property contributed to the Company, there may be a difference between the Book Value of a Company asset and the asset’s adjusted tax basis of the property to the Company for federal income tax purposes and its fair market value at the time of the contributionproperty’s contribution or revaluation pursuant to this Agreement. In such a case, all items of tax depreciation, cost recovery, amortization, and gain or loss with respect to such properties asset shall be allocated among the Members to take into account the disparities between the Book Values and the adjusted tax basis with respect to such disparities properties as determined by the Board in accordance with the provisions of sections 704(b) and 704(c) of the Code and the Treasury Regulations under those sections, using the “remedialmethod” (as defined in Regulation 1.704-3(d)) for allocating section 704(c) items ; provided, however, that any tax items not required to be allocated under sections 704(b) or 704(c) of the Code shall be allocated in the same manner as such gain or loss would be allocated for book purposes under Section 6.2. (c) For tax purposes, recapture of tax If any deductions arising out of a for depreciation are recaptured as ordinary income upon the sale or other disposition of property shallCompany properties, to the extent consistent with the allocations for tax purposes ordinary income character of the gain from such sale or amount realized giving rise to such recapture, disposition shall be allocated to among the Members in the same proportions ratio as the recaptured deduction was originally deductions giving rise to such ordinary income character were allocated. (d) All items of income, gain, loss, deduction and credit allocated to the Members in accordance with the provisions hereof and basis allocations recognized by the Company for federal income tax purposes shall be determined without regard to any election under Section 754 of the Code which may be made by the Company; provided, however, such allocations, once made, shall be adjusted as necessary or appropriate to take into account the adjustments permitted by Sections 734 and 743 of the Code.