Common use of Multiple Losses Clause in Contracts

Multiple Losses. A has a $100 loss, B has a $100 of income, C has a $400 loss, and the Group has a $400 NOL. If A, B, and C filed separate income tax returns, A would have no tax liability and a $100 NOL carryforward, B would have a $21 tax liability, and C would have no tax liability and a $400 NOL carryforward. Under paragraph 3.A.i., the Group has no tax liability to allocate. Under paragraph 3.A.ii., B pays $21 of tax ($21 separate return liability - $0 of tax allocated under 3.A.i.) to Parent because B saved $21 in tax by using $100 of A and C’s $500 combined loss. Under Paragraph 3.B.ii., Parent must allocate and pay $21 among A and C ($100 * .21) because the Group used $100 of their losses to offset B’s $100 of income. Parent allocates the $21 between A and C proportionate with their respective shares of the loss, 1/5th to A and 4/5ths to C. Parent pays $4.20 to A as compensation for $20 of A’s $100 loss, which the Group partially used to offset B’s income, and Parent pays $16.80 to C as compensation for $80 of C’s $400 loss, which the Group partially used to offset B’s income. A has $80 of remaining losses to carry forward ($100 - $20), and C has $320 of remaining losses to carry forward ($400 - $80). The Group has a $400 NOL carryforward.

Appears in 2 contracts

Samples: Federal Income Tax Sharing Agreement (Riversource Life Insurance Co), Federal Income Tax Sharing Agreement (Ameriprise Certificate Co)

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Multiple Losses. A has a $100 loss, B has a $100 of income, C has a $400 loss, and the Group has a $400 NOL. If A, B, and C filed separate income tax returns, A would have no tax liability and a $100 NOL carryforward, B would have a $21 tax liability, and C would have no tax liability and a $400 NOL carryforward. Under paragraph 3.A.i2.A.i., the Group has no tax liability to allocate. Under paragraph 3.A.ii2.A.ii., B pays $21 of tax ($21 separate return liability - $0 of tax allocated under 3.A.i2.A.i.) to Parent because B saved $21 in tax by using $100 of A and C’s $500 combined loss. Under Paragraph 3.B.iiB.ii., Parent must allocate and pay $21 among A and C ($100 * .21) because the Group used $100 of their losses to offset B’s $100 of income. Parent allocates the $21 between A and C proportionate with their respective shares of the loss, 1/5th to A and 4/5ths to C. Parent pays $4.20 to A as compensation for $20 of A’s $100 loss, which the Group partially used to offset B’s income, and Parent pays $16.80 to C as compensation for $80 of C’s $400 loss, which the Group partially used to offset B’s income. A has $80 of remaining losses to carry forward ($100 - $20), and C has $320 of remaining losses to carry forward ($400 - $80). The Group has a $400 NOL carryforward.

Appears in 1 contract

Samples: Federal Income Tax Sharing Agreement (Ameriprise Certificate Co)

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Multiple Losses. A has a $100 lossof income, B has a $100 of income200 loss, C has a $400 500 loss, and the Group has a $400 600 NOL. If A, B, and C filed separate income tax returns, A would have a $35 tax liability, B would have no tax liability and a $100 200 NOL carryforward, B would have a $21 tax liability, and C would have no tax liability and a $400 500 NOL carryforward. Under paragraph 3.A.i2.A.i., the Group has no tax liability to allocate. Under paragraph 3.A.ii2.A.ii., B A pays $21 35 of tax ($21 35 separate return liability - $0 of tax allocated under 3.A.i2.A.i.) to Parent because B A saved $21 35 in tax by using $100 of A B and C’s $500 700 combined loss. Under Paragraph 3.B.iiB.ii., Parent must allocate and pay $21 35 among A B and C ($100 * .21.35) because the Group used $100 of their losses to offset BA’s $100 of income. Parent allocates the $21 35 between A B and C proportionate with their respective shares of the loss, 1/5th 2/7ths to A B and 4/5ths 5/7ths to C. Parent pays $4.20 10 to A B as compensation for $20 29 of AB’s $100 losslosses, which the Group partially used to offset B$10 of A’s incometax, and Parent pays $16.80 25 to C as compensation for $80 71 of C’s $400 losslosses, which the Group partially used to offset B$25 of A’s incometax. A B has $80 171 of remaining losses to carry forward ($100 200 - $2029), and C has $320 429 of remaining losses to carry forward ($400 500 - $8071). The Group has a $400 600 NOL carryforward.

Appears in 1 contract

Samples: Federal Income Tax Sharing Agreement (Riversource Life Insurance Co)

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