Common use of Reporting of Transactions Clause in Contracts

Reporting of Transactions. (a) KAR and Spinco shall timely file any appropriate information and statements (including as required by Section 6045B of the Code and Section 1.355-5 of the Treasury Regulations and, to the extent applicable, Section 1.368-3 of the Treasury Regulations) to report each step of the Transactions in accordance with the Intended Tax Treatment. The Tax treatment of any step in or portion of the Transactions shall be reported on each applicable Tax Return consistently with the treatment thereof in any Tax Opinion, taking into account the jurisdiction in which such Tax Returns are filed, unless there is no Reasonable Basis for such Tax treatment. In the event that a Party shall determine that there is no Reasonable Basis for such Tax treatment, such Party shall notify the other Party no later than twenty (20) Business Days prior to filing the relevant Tax Return and the Parties shall attempt in good faith to agree on the manner in which the relevant portion of the Transactions shall be reported. (b) After the date hereof, the Parties shall cooperate in good faith to analyze the impact of a protective election under Section 336(e) of the Code and the Treasury Regulations issued thereunder for Spinco and each member of the Spinco Group with respect to the Distribution (a “Protective Section 336(e) Election”). Solely in the event that KAR determines, in its sole discretion, to make a Protective Section 336(e) Election: (i) KAR and Spinco shall cooperate in making a timely protective election under Section 336(e) of the Code and Section 1.336-2(j) of the Treasury Regulations (and any similar provision of applicable state or local Tax Law) for each member of the Spinco Group that KAR determines for U.S. federal income tax purposes with respect to the Distribution in accordance with Section 1.336-2(h) of the Treasury Regulations and filing any statements, amending any Tax Returns or taking such other action reasonably necessary to carry out the Protective Section 336(e) Election. For the avoidance of doubt, it is intended that the Protective Section 336(e) Election, if made, will have no effect unless, pursuant to a Final Determination, the Distribution is treated as a “qualified stock disposition” within the meaning of Section 1.336-1(b)(6) of the Treasury Regulations. (ii) In the event that a Protective Section 336(e) Election is made and becomes effective, KAR shall determine, in its sole discretion, the “Aggregate Deemed Asset Disposition Price” and the “Adjusted Grossed-Up Basis” (each as defined under applicable Treasury Regulations) and the allocation of such Aggregate Deemed Asset Disposition Price and Adjusted Grossed-Up Basis among the disposition date assets of Spinco and its Subsidiaries, each in accordance with the applicable provisions of Section 336(e) of the Code and applicable Treasury Regulations (the “Section 336(e) Allocation Statement”), and shall provide a copy of such Section 336(e) Allocation Statement to Spinco. To the extent the Protective Section 336(e) Election is made and becomes effective, each Party agrees not to take any position (and to cause each of its Affiliates not to take any position) that is inconsistent with the Protective Section 336(e) Election, including the Section 336(e) Allocation Statement, on any Tax Return, in connection with any Tax Contest or for any other Tax purposes (in each case, excluding any position taken for financial accounting purposes), except as may be required by a Final Determination. (iii) In the event that a Protective Section 336(e) Election is made and becomes effective and Spinco or any member of the Spinco Group realizes an increase in Tax basis as a result of such Protective Section 336(e) Election (the “Section 336(e) Tax Basis Increase”), then the cash Tax savings actually realized by Spinco or any member of the Spinco Group as a result of the Section 336(e) Tax Basis Increase if, as and when realized by Spinco or such member of the Spinco Group arising from the Section 336(e) Tax Basis Increase (including, for the avoidance of doubt, any such additional Section 336(e) Tax Basis Increase attributable to payments made pursuant to this Section 3.6(b)) resulting from the Protective Section 336(e) Election, determined on a “with and without” basis (treating any deductions or amortization attributable to the step up in Tax basis resulting from the Protective 336(e) Election, or any other recovery of such step up, as the last items claimed for any taxable year, including after the utilization of any available net operating loss carryforwards) (the “Section 336(e) Benefit Amount”) shall be allocated as follows: (x) first, to KAR in the amount of the Incremental Section 336(e) Tax and (y) thereafter, shared between KAR and Spinco in the same proportion as the Taxes imposed on the Transactions giving rise to the Section 336(e) Tax Basis Increase were borne by KAR and Spinco (after giving effect to the indemnification obligations in this Agreement). (iv) Within fifteen (15) Business Days of actually realizing any Section 336(e) Benefit Amount, the Party realizing the Section 336(e) Benefit Amount (including through the realization of such Section 336(e) Benefit Amount by such Party’s Affiliates) shall (i) notify the other Party of any such Section 336(e) Benefit Amount, including by providing such other Party with reasonable documentation of such Section 336(e) Benefit Amount and (ii) pay the other Party the amount of any such Section 336(e) Benefit Amount to which such other Party is entitled pursuant to Section 3.6(b)(iii); provided, however, that the amount of any such payment shall be net of any and all Tax-Related Losses or other costs and expenses incurred by the Party realizing the Section 336(e) Benefit Amount in connection with the realization of such Section 336(e) Benefit Amount or the payment of such Section 336(e) Benefit Amount to other Party. (v) For purposes of this Section 3.6(b), a Party shall be deemed to have realized a Section 336(e) Benefit Amount on the earlier of: (i) the date on which a Tax Return is filed (taking into account any applicable extensions) that reflects actual cash tax savings as a result of any Section 336(e) Benefit Amount and (ii) the date on which payment of the relevant Tax which would have been due and payable absent any such Section 336(e) Tax Benefit Amount (determined without taking into account any applicable extensions).