Common use of Tax Allocations and Distributions Clause in Contracts

Tax Allocations and Distributions. 9.1 The Net Profits of the Company for each fiscal year shall be allocated among the Members as follows: (a) First to the Members in an amount equal to, and in proportion to, the aggregate amount of Net Losses theretofore allocated to each Member; and (b) Thereafter, in proportion to their respective Interests in the Company Any credit available for income tax purposes shall be allocated among the Members in proportion to their respective Interests in the Company. 9.2 Gain from a Capital Transaction shall be allocated in the following order: (a) There shall first be allocated to those Members, if any, who have deficit balances in their Capital Accounts immediately prior to such transaction, an amount of such gain equal to the aggregate amount of such deficit balances, which amount shall be allocated in the same proportion as such deficit balances. (b) There shall next be allocated to each of the Members, gain equal to the amount by which (x) the aggregate Net Proceeds derived from such transaction distributable to each Member in accordance with the provisions of Section 8.1(b) (i) and (iii), assuming such amounts are distributable, exceeds (y) the positive balance, if any, in such Member's Capital Account after such Member's Capital Account has been adjusted to reflect the gain allocated to such Member pursuant to paragraph (a) above; provided, however, that if there shall be an insufficient amount of gain determined by this paragraph, then the gain shall be allocated to the Members in proportion to the respective amounts determined pursuant to this paragraph. (c) Any remaining gain shall be allocated among the Members in proportion to their respective Interests in the Company. (d) If the Company shall realize, upon such transaction, gain which is treated as ordinary income under Section 1245 or 1250 of the Code, such ordinary income shall be allocated to the Members who receive the allocation of the depreciation or cost recovery deduction that generated the ordinary income, which amount shall be allocated in the same proportions as such deductions. 9.3 Net Losses of the Company shall be allocated among the Members as follows: (a) First, to the Members in proportion to their respective positive Capital Account balances until such balances are reduced to zero; and (b) The balance shall be allocated to the Members in proportion to their respective Interests in the Company. 9.4 Loss from a Capital Transaction from the sale or other disposition of all or substantially all of the assets shall be allocated in the following order: (a) First, to those Members, if any, who have positive balances in their Capital Accounts, an amount of such loss equal to the aggregate amount of such positive balances, which amount shall be allocated in the same proportion as such positive balances; and (b) The balance of such loss shall be allocated to the Members in proportion to their respective Interests in the Company 9.5 Notwithstanding the foregoing provisions of Article 9: (a) In accordance with Sections 704 (b) and (c) of the Code and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the Company (including all or part of any deemed Capital Contribution under Section 708 of the Code) shall, solely for tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such property to the Company and its agreed value. In the event that Capital Accounts are ever adjusted pursuant to Treasury Regulation Section 1.704-1(b) (2) to reflect the fair market value of any Company property, subsequent allocations of income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset and its value as adjusted in the same manner as required under Section 704 (c) of the Code and the Treasury Regulations thereunder. (b) At no time shall any allocation of losses be made to a Member if such allocation would cause the deficit in the Member's adjusted Capital Account, if any, to exceed his allocable share of "Company Minimum Gain" or "Minimum Gain Attributable to Member Nonrecourse Debt" (as defined in Treasury Regulation Sections 1.704-2 (g) (1) and (i) (5), respectively), and any losses not allocated to a Member by reason of this clause (b) shall be allocated to each Member whose deficit, if any, in the Member's adjusted Capital Account of such Member shall not exceed his allocable share of such minimum gain by reason of such allocation. (c) If there is a net decrease in the Company's minimum gain (within the meaning of Treasury Regulation Section 1.704-2 (g) (2)) for a Company taxable year and, at the end of such taxable year, the deficit, if any, in a Member's Capital Account exceeds his allocable share of such minimum gain, gross income of the Company shall be allocated to such Member in an amount equal to such excess so as to satisfy the requirements of Treasury Regulation Section 1.704-2 (f) (minimum gain chargeback). (d) If, during any taxable year, there is a net decrease in Company Minimum Gain Attributable to Member Nonrecourse Debt, then, before any other allocations are made for such year other than those pursuant to clause (b) above, each Member with a share of the Company Minimum Gain Attributable to Member Nonrecourse Debt at the beginning of the year shall be allocated items of Company income and gain for such year (and, if necessary, for subsequent years) in an amount equal to each Member's share of the net decrease in Minimum Gain Attributable to Member Nonrecourse Debt as determined in accordance with Treasury Regulation Section 1.704-2 (i) (4) in a manner so as to satisfy the requirements of said Treasury Regulation. (e) If, during any taxable year, a Member unexpectedly receives an adjustment, allocation or distribution described in paragraph (4), (5) or (6) of Treasury Regulation Section 1.704-1(b) (2) (ii) (~, and if such adjustment, allocation or distribution would cause at the end of the taxable year a deficit balance in such Member's Capital Account in excess of his allocable share of minimum gain as described above, then such Member shall be allocated items of income and gain for such taxable year (and, if necessary, subsequent taxable years) in an amount and in a manner sufficient to eliminate such excess balance as quickly as possible before any other allocation is made for such year, other than pursuant to Sections 9.5(b) and (c), so as to satisfy the requirements of Treasury Regulation Section 1.704-1(b) (2) (ii) (~ (qualified income offset). (f) In the event any Member has a deficit balance in his Capital Account at the end of the fiscal year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement, if any, and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Treasury Regulations Sections 1.704-2 (g) (1) and 1.704-2 (i) (5), each Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible.