Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Membership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies. 2. If a Member transfers any part or all of its Membership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the Company, the Manager, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares. 3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company by a Member shall be shared among the Members so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold. 4. If the Company is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such Member. 5. To the extent any payments in the nature of fees made to a Member or reimbursements of expenses to any Member are finally determined by the Internal Revenue Service to be distributions to a Member for federal income tax purposes, there will be a gross income allocation to such Member in the amount of such distribution. (a) Notwithstanding any provision of the Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during any Company fiscal year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each Member’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Agreement with respect to such fiscal year and without regard to any net decrease in Member Minimum Gain during such fiscal year. (b) Notwithstanding any provision of the Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Company fiscal year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each Member’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a). 7. If any Members unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially allocated to such Members in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B. 8. No loss shall be allocated to any Member to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the Manager. 9. If any Member has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member shall be specially allocated items of Company gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B. 10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member pursuant to Article V of the Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of Article V of the Agreement if such special allocations had not occurred. 11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members in the manner set forth in Section 5.1(b)(iii) of the Agreement. 12. Any Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in accordance with the ratios in which they share such economic risk of loss. 13. If the Company disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the Company) among the Members as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Agreement.
Appears in 3 contracts
Samples: Limited Liability Company Agreement (Ashford Inc.), Limited Liability Company Agreement (Ashford Inc.), Limited Liability Company Agreement (Ashford Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii) of the Partnership Agreement.
12. Any Member Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member Partner bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Partner Nonrecourse Debt, Member Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Members Partners in accordance with the ratios in which they share such economic risk of loss.
13. If the Company Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Partnership Agreement. B. CAPITAL ACCOUNT ADJUSTMENTS AND TAX ALLOCATIONS.
1. For purposes of computing the amount of any item of income, gain, deduction or loss to be reflected in the Partners’ Capital Accounts, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for federal income tax purposes; provided, however, that:
(a) Any income, gain or loss attributable to the taxable disposition of any property shall be determined by the Partnership as if the adjusted basis of such property as of such date of disposition was equal in amount to the Carrying Value.
(b) The computation of all items of income, gain, loss and deduction shall be made by the Partnership and, as to those items described in Section 705(a)(1)(B) or Section 705(a)(2)(B) of the Code, without regard to the fact that such items are not includable in gross income or are neither currently deductible nor capitalizable for federal income tax purposes.
(c) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing the Partnership’s taxable income or loss, there shall be taken into account Depreciation for a fiscal year or other period.
(d) The Partnership shall be treated as owning directly its proportionate share (as determined by the General Partner based upon the provisions of the applicable partnership or limited liability agreement of a Subsidiary of the Partnership) of all property owned by (i) a Subsidiary of the Partnership that is classified as a partnership for U.S. federal income tax purposes and (ii) any other partnership, limited liability company, unincorporated business or other entity classified as a partnership for U.S. federal income tax purposes of which the Partnership or a Subsidiary of the Partnership is, directly or indirectly, a partner, member or other equity holder.
2. A transferee of a Partnership Interest will succeed to the Capital Account relating to the Partnership Interest transferred.
3. Upon (i) an issuance of additional Partnership Interests in exchange for more than a de minimis capital contribution to the Partnership, (ii) an issuance of additional Partnership Interests (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity or by a new Partner acting in a partner capacity or in anticipation of being a Partner, or (iii) the distribution by the Partnership to a Partner of more than a de minimis amount of property as consideration for an interest in the Partnership, the Capital Accounts of all Partners (and the Carrying Values of all Partnership properties) shall, immediately prior to such event, be adjusted (consistent with the provisions hereof) upward or downward to reflect any unrealized gain or unrealized loss attributable to each Partnership property (as if such unrealized gain or unrealized loss had been recognized upon an actual sale of such property at the fair market value thereof, immediately prior to such issuance, and had been allocated to the Partners, at such time, pursuant to Article V of the Partnership Agreement). In determining such unrealized gain or unrealized loss attributable to the properties, the fair market value of Partnership properties shall be determined by the General Partner using such reasonable methods of valuation as it may adopt.
4. Immediately prior to the distribution of any Partnership property, the Capital Accounts of all Partners shall be adjusted (consistent with the provisions hereof and Section 704 of the Code) upward or downward to reflect any unrealized gain or unrealized loss attributable to the Partnership property distributed (as if such unrealized gain or unrealized loss had been recognized upon an actual sale of each such property, immediately prior to such distribution, and had been allocated to the Partners, at such time, pursuant to Article V of the Partnership Agreement). In determining such unrealized gain or unrealized loss attributable to property, the fair market value of Partnership property distributed shall be determined by the General Partner using such reasonable methods of valuation as it may adopt.
5. In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property shall, solely for tax purposes, and not for Capital Account purposes, be allocated among the Partners so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its Carrying Value. The General Partner shall make any elections or other decisions relating to such allocations.
6. If the Carrying Value of any Partnership asset is adjusted as described in paragraph 3 above, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis for federal income tax purposes of such asset and its Carrying Value immediately after such adjustment in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder.
7. Any elections or other decisions relating to such allocations shall be made by the General Partner in any manner that reasonably reflects the purpose and intention of the Partnership Agreement and this Exhibit B.
Appears in 2 contracts
Samples: Agreement of Limited Partnership (Ashford Hospitality Trust Inc), Agreement of Limited Partnership (Ashford Hospitality Trust Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member in complete liquidation of its Membership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in accordance with their interests in the Company if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member transfers any part or all of its Membership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the Company, the Manager, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company by a Member shall be shared among the Members so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such Member.
5. To the extent any payments in the nature of fees made to a Member or reimbursements of expenses to any Member are finally determined by the Internal Revenue Service to be distributions to a Member for federal income tax purposes, there will be a gross income allocation to such Member in the amount of such distribution.
(a) Notwithstanding any provision of the Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Minimum Gain during any Company fiscal year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Company Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each Member’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Agreement with respect to such fiscal year and without regard to any net decrease in Member Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain during any Company fiscal year, each Member who has a share of the Member Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Member’s share of the net decrease in Member Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each Member’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a).
7. If any Members unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be specially allocated to such Members in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the Manager.
9. If any Member has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member shall be specially allocated items of Company gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member pursuant to Article V of the Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of Article V of the Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members in the manner set forth in Section 5.1(b)(iii) of the Agreement.
12. Any Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in accordance with the ratios in which they share such economic risk of loss.
13. If the Company disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the Company) among the Members as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Agreement.
Appears in 2 contracts
Samples: Limited Liability Company Agreement (Ashford Inc), Limited Liability Company Agreement (Ashford Hospitality Trust Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii) of the Partnership Agreement.
12. Any Member Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member Partner bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Partner Nonrecourse Debt, Member Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Members Partners in accordance with the ratios in which they share such economic risk of loss.
13. If Notwithstanding any provision in Article V of the Company Partnership Agreement or this Exhibit B to the contrary, if the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Partnership Agreement.
Appears in 2 contracts
Samples: Limited Partnership Agreement (Ashford Hospitality Prime, Inc.), Agreement of Limited Partnership (Ashford Hospitality Trust Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed propertyContributed Property. The Company Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(51.704-(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii5.1(b)(ii) of the Partnership Agreement.
12. Any Member Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member Partner bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Partner Nonrecourse Debt, Member Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Members Partners in accordance with the ratios in which they share such economic risk of loss.
13. If Notwithstanding any provision in Article V of the Company Partnership Agreement or this Exhibit B to the contrary, if the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Partnership Agreement.
Appears in 2 contracts
Samples: Agreement of Limited Partnership (Stirling Hotels & Resorts, Inc.), Contribution Agreement (Ashford Hospitality Trust Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(21.704‑1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(41.704‑1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(21.704‑1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(41.704‑1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Book‑Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in built‑in gain or loss associated with contributed property. The Company Partnership shall account for Book-Tax Book‑Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in built‑in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(51.704‑2(f)(2) ‑ (5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(21.704‑2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f1.704‑2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(41.704‑2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(31.704‑2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(51.704‑2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(41.704‑2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(41.704‑1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(61.704‑1(b), items of Company income and gain shall be specially allocated to such Members in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the Manager.
9. If any Member has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member shall be specially allocated items of Company gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member pursuant to Article V of the Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member pursuant to the provisions of Article V of the Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members in the manner set forth in Section 5.1(b)(iii) of the Agreement.
12. Any Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in accordance with the ratios in which they share such economic risk of loss.
13. If the Company disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the Company) among the Members as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Agreement.
Appears in 1 contract
Samples: Limited Partnership Agreement (Ashford Hospitality Prime, Inc.)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company Operating Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii) of the Partnership Agreement.
12. Any Member Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in accordance with the ratios in which they share such economic risk of loss.
13. If Notwithstanding any provision in Article V of the Company Partnership Agreement or this Exhibit B to the contrary, if the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Partnership Agreement.
Appears in 1 contract
Samples: Limited Partnership Agreement (Ashford Hospitality Prime, Inc.)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company if Partnership in the event Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if in the event Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To Notwithstanding any other provision of the Partnership Agreement, to the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed property. The Company Operating Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If Notwithstanding any other provision of the Company Partnership Agreement, in the event the Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To Notwithstanding any provision of the Partnership Agreement to the contrary, to the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If Notwithstanding any Members provision of the Partnership Agreement to the contrary, in the event any Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If In the event any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Notwithstanding any provision of the Partnership Agreement to the contrary, Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii) of the Partnership Agreement.
12. Any Member Notwithstanding any provision of the Partnership Agreement to the contrary, any Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Nonrecourse Debt, Member Nonrecourse Deductions attributable thereto shall be allocated between or among such Members in accordance with the ratios in which they share such economic risk of loss.
13. If Notwithstanding any provision in Article V of the Company Partnership Agreement or this Exhibit B to the contrary, in the event that the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII VII of the Partnership Agreement.
Appears in 1 contract
Samples: Agreement of Limited Partnership (Ashford Hospitality Trust Inc)
Special Allocation Provisions. 1. To the extent an adjustment to the adjusted tax basis of any Company Partnership asset pursuant to Code Section 734(b) or Section 743(b) is required pursuant to Section 1.704-1(b)(2)(iv)(m)(2) or Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations to be taken into account in determining Capital Accounts as the result of a distribution to a Member Partner in complete liquidation of its Membership Partnership Interest, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members Partners in accordance with their interests in the Company Partnership if Section 1.704-1(b)(2)(iv)(m)(2) of the Treasury Regulations applies, or to the Company Partnership to whom such distribution was made if Section 1.704-1(b)(2)(iv)(m)(4) of the Treasury Regulations applies.
2. If a Member Partner transfers any part or all of its Membership Partnership Interest or if Common Percentage Interests or Preferred Percentage Interests vary during a taxable year of the CompanyPartnership, the ManagerGeneral Partner, in its sole and absolute discretion, shall determine which method authorized under the Code (including Section 706 of the Code) and the Treasury Regulations shall be used to allocate the distributive shares.
3. To the extent required by law, income, gain, loss and deduction attributable to property contributed to the Company Partnership by a Member Partner shall be shared among the Members Partners so as to take into account any variation between the basis of the property and the fair market value of the property at the time of contribution in accordance with the requirements of Section 704(c) of the Code and the applicable Treasury Regulations thereunder as more fully described in Part B. B hereof. Treasury Regulations under Section 704(c) of the Code allow partnerships to use any reasonable method for accounting for Book-Tax Differences for contributions of property so that a contributing partner receives the tax benefits and burdens of any built-in gain or loss associated with contributed propertyContributed Property. The Company Partnership shall account for Book-Tax Differences using a method specifically approved in the Treasury Regulations, such as the traditional method. An allocation of remaining built-in gain under Section 704(c) will be made when Section 704(c) property is sold.
4. If the Company Partnership is entitled to a deduction for interest imputed under any provision of the Code on any loan or advance from a Member Partner (whether such interest is currently deducted, capitalized or amortized), such deduction shall be allocated solely to such MemberPartner.
5. To the extent any payments in the nature of fees made to a Member Partner or reimbursements of expenses to any Member Partner are finally determined by the Internal Revenue Service to be distributions to a Member Partner for federal income tax purposes, there will be a gross income allocation to such Member Partner in the amount of such distribution.
(a) Notwithstanding any provision of the Partnership Agreement to the contrary and subject to the exceptions set forth in Section 1.704-2(f)(2)-(5) of the Treasury Regulations, if there is a net decrease in Company Partnership Minimum Gain during any Company Partnership fiscal year, each Member Partner shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Company Partnership Minimum Gain determined in accordance with Section 1.704-2(g)(2) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(f) of the Treasury Regulations. This paragraph 6(a) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. To the extent permitted by such Section of the Treasury Regulations and for purposes of this paragraph 6(a) only, each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year and without regard to any net decrease in Member Partner Minimum Gain during such fiscal year.
(b) Notwithstanding any provision of the Partnership Agreement to the contrary, except paragraph 6(a) of this Exhibit B and subject to the exceptions set forth in Section 1.704-2(i)(4) of the Treasury Regulations, if there is a net decrease in Member Partner Nonrecourse Debt Minimum Gain during any Company Partnership fiscal year, each Member Partner who has a share of the Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(3) of the Treasury Regulations, shall be specially allocated items of Company Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such MemberPartner’s share of the net decrease in Member Partner Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-2(i)(5) of the Treasury Regulations. Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Member Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Section 1.704-2(i)(4) of the Treasury Regulations. This paragraph 6(b) is intended to comply with the minimum gain chargeback requirement in such Section of the Treasury Regulations and shall be interpreted consistently therewith. Solely for purposes of this paragraph 6(b), each MemberPartner’s Adjusted Capital Account Balance shall be determined prior to any other allocations pursuant to Article V of the Partnership Agreement with respect to such fiscal year, other than allocations pursuant to paragraph 6(a)) hereof.
7. If any Members Partners unexpectedly receive any adjustments, allocations or distributions described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(51.704-(b) (2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company Partnership income and gain shall be specially allocated to such Members Partners in an amount and manner sufficient to eliminate the deficits in their Adjusted Capital Account Balances created by such adjustments, allocations or distributions as quickly as possible, provided that an allocation pursuant to this paragraph 7 shall be made only if and to the extent that the Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided for Article V of the Partnership Agreement and this Exhibit B have been tentatively made as if this paragraph 7 were not in this Exhibit B.
8. No loss shall be allocated to any Member Partner to the extent that such allocation would result in a deficit in its Adjusted Capital Account Balance while any other Member Partner continues to have a positive Adjusted Capital Account Balance; in such event, losses shall first be allocated to any Members Partners with positive Adjusted Capital Account Balances, and in proportion to such balances, to the extent necessary to reduce their positive Adjusted Capital Account Balances to zero. Any excess shall be allocated to the ManagerGeneral Partner.
9. If any Member Partner has a deficit balance in its Adjusted Capital Account Balance at the end of any fiscal year or other period, such Member Partner shall be specially allocated items of Company Partnership gross income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this paragraph 9 shall be made only if and to the extent that such Member Partner would have a deficit balance in its Adjusted Capital Account Balance after all other allocations provided in this Part A have been tentatively made as if paragraph 7 and this paragraph 9 were not in this Exhibit B.
10. Any special allocations of items pursuant to this Part A shall be taken into account in computing subsequent allocations so that the net amount of any items so allocated and the profits, losses and all other items allocated to each such Member Partner pursuant to Article V of the Partnership Agreement shall, to the extent possible, be equal to the net amount that would have been allocated to each such Member Partner pursuant to the provisions of Article V of the Partnership Agreement if such special allocations had not occurred.
11. Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members Partners in the manner set forth in Section 5.1(b)(iii) of the Partnership Agreement.
12. Any Member Partner Nonrecourse Deductions Deduction for any fiscal year or other period shall be specially allocated to the Member Partner who bears the economic risk of loss with respect to the Member Partner Nonrecourse Debt to which such Member Partner Nonrecourse Deductions are attributable in accordance with Section 1.704-2(i) of the Treasury Regulations. If more than one Member Partner bears the economic risk of loss (in accordance with Section 1.704-2(i) of the Treasury Regulations) with respect to a Member Partner Nonrecourse Debt, Member Partner Nonrecourse Deductions attributable thereto shall be allocated between or among such Members Partners in accordance with the ratios in which they share such economic risk of loss.
13. If Notwithstanding any provision in Article V of the Company Partnership Agreement or this Exhibit B to the contrary, if the Partnership disposes of all or substantially all of its assets in a transaction that will lead to a liquidation of the Company Partnership pursuant to Article X, then any profits or losses realized in connection with such transaction and thereafter (and, if necessary, constituent items of income, gain, loss and deduction) shall be specially allocated for such taxable year of the Company Partnership (and to the extent permitted by Section 761(c) of the Code, for the immediately preceding taxable year of the CompanyPartnership) among the Members Partners as required so as to cause liquidating distributions pursuant to Section 10.4(a) of the Partnership Agreement to be Exh. B-3 made in the same amounts and proportions as would have resulted had such distributions instead been made pursuant to Article VIII of the Partnership Agreement.
Appears in 1 contract
Samples: Limited Partnership Agreement (Ashford Hospitality Prime, Inc.)
