Common use of Recharacterization of Guaranteed Payment as Distribution Clause in Contracts

Recharacterization of Guaranteed Payment as Distribution. In the event that a guaranteed payment to a Partnership Unit Holder is ultimately recharacterized (as the result of an audit of the Partnership’s tax return or otherwise) as a distribution for federal income tax purposes, and if such recharacterization has the effect of disallowing a deduction or reducing the adjusted basis of any asset of the Partnership, then an amount of the Partnership’s gross income equal to such disallowance or reduction shall be allocated to the recipient of such payment.