Common use of TAX ASSUMPTIONS Clause in Contracts

TAX ASSUMPTIONS. The Basic Rent payable by Lessee and Net Economic Return have been computed on the basis of the following tax assumptions: (a) for Federal income tax purposes the Trust Estate will be treated as a trust subject to the provisions of Section 671 through 679 of the Code, and Owner Participant will, as the owner of the entire interest in the Trust Estate, take into account in computing its Federal income tax liability all items of income, loss, gain, deduction and credit (including the MACRS Deductions (as hereinafter defined)) of the Trust Estate; (b) the Lease will be treated as a true lease under which Owner Participant will be treated as owner and lessor and Lessee will be treated as lessee; (c) for Federal income tax purposes, including for purposes of Section 861 of the Code, all amounts includible in the gross income of Owner Participant, Lessor or the Trust Estate with respect to the transactions contemplated by the Operative Documents and all deductions and credits allowable to Owner Participant, Lessor or the Trust Estate with respect to the transactions contemplated by the Operative Documents will be treated as derived from, or allocable to, sources within the United States; (d) the Federal rate of tax on the taxable income of Lessor will be 34%; (e) Owner Participant, as the owner of the Facility Assets as of the Closing Date, will be entitled to such deductions, credits and other benefits as are provided by the Code to an owner of property, including (A) as to an amount (the "Seven-year Amount") equal to 97.800% of Lessor's Cost, deductions for cost recovery with respect to the Facility Assets under Section 168(b)(1) of the Code computed using a seven-year recovery period, the 200% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 14.29% of the Seven-year Amount in the taxable year of Lessor that includes the Closing Date and 24.49%, l7.49%, 12.49%, 8.93%, 8.92%, 8.93% and 4.46% of the Seven-year Amount (such percentages to be calculated to more than two decimal places for purposes of determining the actual deductions) in its succeeding seven taxable years, respectively, (B) an to an amount (the "Nonresidential Real Property Amount") equal to 7.012% of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computed using a 31.5-year recovery period, the straight-line method and the mid-month convention, resulting in deductions in an amount equal to 3.042% of the Nonresidential Real Property Amount in the taxable year of Lessor that includes the Closing Date, 3.175% in the succeeding thirty taxable years and 1.720% in the last taxable year and (C) as to an amount (the "Fifteen-year amount" equal to .005% % of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computer using a fifteen-year recovery period, the 150% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 5.00% of the Fifteen-year Amount in the taxable year of Lessor that includes the Closing Date and 9.50%, 8.55%, 7.70%, 6.93%, 6.23%, 5.90%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91% and 2.95% in its succeeding fifteen taxable years, respectively (the deductions referred to in clauses (A), (B) and (c) being hereinafter referred to as the "MACRS Deductions"); (f) neither Owner Participant, Lessor nor the Trust Estate will at any time be required for Federal income tax purposes to include in its gross income any amount with respect to the transactions contemplated by the Operative Documents other than (i) payments of Basic Rent in the amounts specified herein accrued ratably over the six-month period preceding the date on which each such payment is required to be made; (ii) the amount of any payment of Stipulated Loss Value on the date such amount is paid under this Lease (but not earlier than the date an which such amount is required to be paid under this Lease); (iii) any amount paid to Lessor or Owner Participant and specifically identified as interest under the Operative Documents on the date such amount is paid; (iv) any amount paid to Lessor or Owner Participant under the Operative Documents, the calculation of which is specifically determined under the Operative Documents to include any amount necessary to hold Lessor or Owner Participant harmless against the income tax consequences of the receipt or accrual thereof; (v) any amount to the extent offset in the same taxable year of Lessee or Owner Participant in which such amount is included in income by a related deduction of the same tax character which deduction is not otherwise taken into account pursuant to this Section 9.01; (vi) payment by Lessee, of the purchase option price pursuant to its exercise of its purchase option pursuant to Section 4.02 on the date such amount is paid; and (vii) the "good-faith deposit" referred to in Section 6.01(c) of the Participation Agreement, if such good-faith deposit is retained by Owner Participant pursuant to clause (ii) of that Section 6.01(c); (g) Lessor's taxable year that includes the Closing Date will be a full taxable year consisting of 12 months and each taxable year of Lessor thereafter will be the calendar year ending December 31; and (h) Owner Participant will be entitled for Federal income tax purposes to (A) deductions with respect to interest on the Loan Certificates in the amounts and at the times interest is stated to accrue on the Loan Certificates pursuant to Section 163 of the Code and to current deductions with respect to premium, if any, and all other amounts (except principal) paid or accrued on the Loan Certificates (such deductions hereinafter referred to as the "Interest Deductions") and (B) deductions with respect to the amortization of an amount equal to Transaction Expenses with respect to the Facility ratably over the Interim and Basic Terms (such deductions hereinafter referred to as the "Amortization Deductions"). For purposes of Section 9.01(e), the term "Lessor's Cost" does not include any Alterations financed by Lessor or Owner Participant. At the time of any such financing, the assumptions set forth in this Section 9.01 shall be revised to reflect the assumptions applicable to such Alterations.

TAX ASSUMPTIONS. The Basic Rent payable by Lessee and Net Economic Return transactions described in the Participation Agreement have been computed entered into on the basis of assumptions (the following "Tax Assumptions") that for federal income tax assumptionspurposes: (a) for Federal income tax purposes the entity created by the Trust Estate Agreement will be treated either as a "grantor trust" under Sections 671 ET SEQ. of the Code (and any successor provisions thereto) or as an agent or nominee of the Owner Participant, and the Owner Participant will be treated as a trust subject to the provisions of Section 671 through 679 owner of the Codeentire trust and be required and entitled to take into account in computing its taxable income all items of income, gain, loss, deduction and credit of the trust in accordance with the accrual method of accounting; (b) at all times during the period beginning on the Delivery Date and ending at the end of the Term, the Lease will constitute a "true lease", the Owner Participant willwill be treated as the purchaser, sole owner and lessor of the Aircraft and the Lessee will be treated as the lessee of the Aircraft; (c) the Owner Participant's taxable year is the calendar year; (d) the Owner Participant, as the owner of the entire interest in the Trust Estate, take into account in computing its Federal income tax liability all items of income, loss, gain, deduction and credit (including the MACRS Deductions (as hereinafter defined)) of the Trust Estate; (b) the Lease will be treated as a true lease under which Owner Participant will be treated as owner and lessor and Lessee will be treated as lessee; (c) Aircraft for Federal federal income tax purposes, including will be entitled to the following federal income tax benefits: (i) cost recovery deductions equal to 14.29% of Lessor's Cost in 2001, 24.49% of Lessor's Cost in 2002, 17.49% of Lessor's Cost in 2003, 12.49% of Lessor's Cost in 2004, 8.93% of Lessor's Cost in 2005, 8.92% of Lessor's Cost in 2006, 8.93% of Lessor's Cost in 2007 and 4.46% of Lessor's Cost in 2008 (the "MACRS Deductions"); and (ii) amortization deductions for purposes of Section 861 Transaction Costs paid or incurred by the Owner Participant in connection with the transactions contemplated by the Operative Agreements computed on a straight-line basis over the period commencing on the first day and ending on the last day of the CodeBasic Term of the Lease (the "Amortization Deductions", all amounts and together with the MACRS Deductions, the "Assumed Tax Benefits"); (e) no amount will be includible in the gross income of the Owner Participant, Lessor or the Trust Estate Participant for income tax purposes with respect to the transactions contemplated by the Operative Documents Agreements at or at any time prior to the expiration or earlier termination of the Lease other than (i) Basic Rent and Renewal Rent in the amounts and at the times required pursuant to the Lease, accrued and allocated in the manner provided by the Lease, (ii) any payment of Termination Value (or the payment of amounts calculated by reference thereto) or sales proceeds pursuant to Section 13 or 14 of the Lease, (iii) any amount paid to or for the benefit of the Owner Participant and specifically identified or calculated as interest, (iv) amounts to the extent they are offset by deductions in the same taxable year to the Owner Participant arising out of the event causing the inclusion of income (other than the Assumed Tax Benefits), (v) all deductions and credits allowable to amounts payable on a grossed up or After Tax Basis to, or for the benefit of, the Owner Participant, Lessor and (vi) amounts received by or for the Trust Estate benefit of the Owner Participant pursuant to a warranty claim or as insurance proceeds with respect to a loss or damage to the Aircraft, to the extent the Owner Participant actually receives and retains and is not required to pay over such amounts to a Lessee Person or some other Person unrelated to the Owner Participant; (f) the Owner Participant will be a domestic corporation subject to a federal income tax rate of 35% (the "Assumed Federal Rate") and a state and local income tax rate (before taking into account the deductibility of state and local income taxes for Federal income tax purposes) of 4.615% (the "Assumed State and Local Rate"), resulting in a combined rate (after giving effect to the deductibility of such state and local income taxes for federal income tax purposes) of 38% (the "Assumed Tax Rate") in 2001 and in each year thereafter, and the Owner Participant will have sufficient taxable income to fully utilize the Assumed Tax Benefits against income taxable at the Assumed Tax Rate; (g) the Aircraft will be deemed to be placed in service by the Owner Participant within the meaning of Section 168 of the Code on the Delivery Date; (h) none of the Owner Participant, the Lessee or any sublessee is, or at any time during the Term will be, a "tax exempt entity" within the meaning of Section 168(h) of the Code; (i) the Owner Participant will not be subject to the alternative minimum tax under Section 55 of the Code; (j) no portion of the MACRS Deductions will be recaptured under Section 1245 of the Code or otherwise during the Term; (k) the Lease will not be a "disqualified leaseback or long-term agreement" within the meaning of Section 467(b) of the Code; and (l) for each taxable year of the Owner Participant during the Tax Attribute Period not more than the Permitted Percentage of any item of income, deduction or loss with respect to the transactions contemplated by the Operative Documents Agreements will be treated for federal income tax purposes as derived from, or allocable to, sources within outside the United States; (d) the Federal rate of tax on the taxable income of Lessor ; The foregoing assumptions will be 34%; (e) Owner Participant, as appropriately modified or adjusted from time to time to reflect the owner occurrence of the Facility Assets as of the Closing Date, will be entitled to such deductions, credits and other benefits as are provided by the Code to an owner of property, including (A) as to event for which an amount (the "Seven-year Amount") equal to 97.800% of Lessor's Cost, deductions for cost recovery with respect to the Facility Assets under Section 168(b)(1) of the Code computed using a seven-year recovery period, the 200% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 14.29% of the Seven-year Amount in the taxable year of Lessor that includes the Closing Date and 24.49%, l7.49%, 12.49%, 8.93%, 8.92%, 8.93% and 4.46% of the Seven-year Amount (such percentages to be calculated to more than two decimal places for purposes of determining the actual deductions) in its succeeding seven taxable years, respectively, (B) an to an amount (the "Nonresidential Real Property Amount") equal to 7.012% of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computed using a 31.5-year recovery period, the straight-line method and the mid-month convention, resulting in deductions in an amount equal to 3.042% of the Nonresidential Real Property Amount in the taxable year of Lessor that includes the Closing Date, 3.175% in the succeeding thirty taxable years and 1.720% in the last taxable year and (C) as to an amount (the "Fifteen-year amount" equal to .005% % of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computer using a fifteen-year recovery period, the 150% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 5.00% of the Fifteen-year Amount in the taxable year of Lessor that includes the Closing Date and 9.50%, 8.55%, 7.70%, 6.93%, 6.23%, 5.90%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91% and 2.95% in its succeeding fifteen taxable years, respectively (the deductions referred to in clauses (A), (B) and (c) being hereinafter referred to as the "MACRS Deductions"); (f) neither Owner Participant, Lessor nor the Trust Estate will at any time be required for Federal income tax purposes to include in its gross income any amount with respect to the transactions contemplated by the Operative Documents other than (i) payments of Basic Rent in the amounts specified herein accrued ratably over the six-month period preceding the date on which each such payment is required to be made; (ii) the amount of any payment of Stipulated Loss Value on the date such amount is indemnity has been paid under this Lease (but not earlier than the date an which such amount is required to be paid under this Lease); (iii) any amount paid to Lessor or Owner Participant and specifically identified as interest under the Operative Documents on the date such amount is paid; (iv) any amount paid to Lessor or Owner Participant under the Operative Documents, the calculation of which is specifically determined under the Operative Documents to include any amount necessary to hold Lessor or Owner Participant harmless against the income tax consequences of the receipt or accrual thereof; (v) any amount to the extent offset in the same taxable year of Lessee or Owner Participant in which such amount is included in income by a related deduction of the same tax character which deduction is not otherwise taken into account pursuant to this Section 9.01; (vi) payment by Lessee, of the purchase option price pursuant to its exercise of its purchase option pursuant to Section 4.02 on the date such amount is paid; and (vii) the "good-faith deposit" referred to in Section 6.01(c) of the Participation Agreement, if such good-faith deposit is retained by Owner Participant pursuant to clause (ii) of that Section 6.01(c); (g) Lessor's taxable year that includes the Closing Date will be a full taxable year consisting of 12 months and each taxable year of Lessor thereafter will be the calendar year ending December 31; and (h) Owner Participant will be entitled for Federal income tax purposes to (A) deductions with respect to interest on the Loan Certificates in the amounts and at the times interest is stated to accrue on the Loan Certificates pursuant to Section 163 of the Code and to current deductions with respect to premium, if any, and all other amounts (except principal) paid or accrued on the Loan Certificates (such deductions hereinafter referred to as the "Interest Deductions") and (B) deductions with respect to the amortization of an amount equal to Transaction Expenses with respect to the Facility ratably over the Interim and Basic Terms (such deductions hereinafter referred to as the "Amortization Deductions"). For purposes of Section 9.01(e), the term "Lessor's Cost" does not include any Alterations financed by Lessor or Owner Participant. At the time of any such financing, the assumptions set forth in this Section 9.01 shall be revised to reflect the assumptions applicable to such Alterations.

TAX ASSUMPTIONS. The Basic Rent payable by Lessee and Net Economic Return transactions described in the Participation Agreement have been computed entered into on the basis of assumptions (the following "Tax Assumptions") that for federal income tax assumptionspurposes: (a) for Federal income tax purposes the entity created by the Trust Estate Agreement will be treated either as a "grantor trust" under Sections 671 ET SEQ. of the Code (and any successor provisions thereto) or as an agent or nominee of the Owner Participant, and the Owner Participant will be treated as a trust subject to the provisions of Section 671 through 679 owner of the Codeentire trust and be required and entitled to take into account in computing its taxable income all items of income, gain, loss, deduction and credit of the trust in accordance with the accrual method of accounting; (b) at all times during the period beginning on the Delivery Date and ending at the end of the Term, the Lease will constitute a "true lease", the Owner Participant willwill be treated as the purchaser, sole owner and lessor of the Aircraft and the Lessee will be treated as the lessee of the Aircraft; (c) the Owner Participant's taxable year is the calendar year; (d) the Owner Participant, as the owner of the entire interest in the Trust Estate, take into account in computing its Federal income tax liability all items of income, loss, gain, deduction and credit (including the MACRS Deductions (as hereinafter defined)) of the Trust Estate; (b) the Lease will be treated as a true lease under which Owner Participant will be treated as owner and lessor and Lessee will be treated as lessee; (c) Aircraft for Federal federal income tax purposes, including will be entitled to the following federal income tax benefits: (i) cost recovery deductions equal to 14.29% of Lessor's Cost in 2001, 24.49% of Lessor's Cost in 2002, 17.49% of Lessor's Cost in 2003, 12.49% of Lessor's Cost in 2004, 8.93% of Lessor's Cost in 2005, 8.92% of Lessor's Cost in 2006, 8.93% of Lessor's Cost in 2007 and 4.46% of Lessor's Cost in 2008 (the "MACRS Deductions"); and (ii) amortization deductions for purposes of Section 861 Transaction Expenses paid or incurred by the Owner Participant in connection with the transactions contemplated by the Operative Agreements computed on a straight-line basis over the period commencing on the first day and ending on the last day of the CodeBasic Term of the Lease (the "Amortization Deductions", all amounts and together with the MACRS Deductions, the "Assumed Tax Benefits"); (e) no amount will be includible in the gross income of the Owner Participant, Lessor or the Trust Estate Participant for income tax purposes with respect to the transactions contemplated by the Operative Documents Agreements at or at any time prior to the expiration or earlier termination of the Lease other than (i) Basic Rent and Renewal Rent in the amounts and at the times required pursuant to the Lease, accrued and allocated in the manner provided by the Lease, (ii) any payment of Termination Value (or the payment of amounts calculated by reference thereto) or sales proceeds pursuant to Section 13 or 14 of the Lease, (iii) any amount paid to or for the benefit of the Owner Participant and specifically identified or calculated as interest, (iv) amounts to the extent they are offset by deductions in the same taxable year to the Owner Participant arising out of the event causing the inclusion of income (other than the Assumed Tax Benefits), (v) all deductions and credits allowable to amounts payable on a grossed up or after-tax basis to, or for the benefit of, the Owner Participant, Lessor and (vi) amounts received by or for the Trust Estate benefit of the Owner Participant pursuant to a warranty claim or as insurance proceeds with respect to a loss or damage to the Aircraft, to the extent the Owner Participant actually receives and retains and is not required to pay over such amounts to a Lessee Person or some other Person unrelated to the Owner Participant; (f) the Owner Participant will be a domestic corporation subject to a federal income tax rate of 35% (the "Assumed Federal Rate") and a state and local income tax rate (before taking into account the deductibility of state and local income taxes for Federal income tax purposes) of 4.615% (the "Assumed State and Local Rate"), resulting in a combined rate (after giving effect to the deductibility of such state and local income taxes for federal income tax purposes) of 38% (the "Assumed Tax Rate") in 2001 and in each year thereafter, and the Owner Participant will have sufficient taxable income to fully utilize the Assumed Tax Benefits against income taxable at the Assumed Tax Rate; (g) the Aircraft will be deemed to be placed in service by the Owner Participant within the meaning of Section 168 of the Code on the Delivery Date; (h) none of the Owner Participant, the Lessee or any sublessee is, or at any time during the Term will be, a "tax exempt entity" within the meaning of Section 168(h) of the Code; (i) the Owner Participant will not be subject to the alternative minimum tax under Section 55 of the Code; (j) no portion of the MACRS Deductions will be recaptured under Section 1245 of the Code or otherwise during the Term; (k) the Lease will not be a "disqualified leaseback or long-term agreement" within the meaning of Section 467(b) of the Code; and (l) for each taxable year of the Owner Participant during the Tax Attribute Period not more than the Permitted Percentage of any item of income, deduction or loss with respect to the transactions contemplated by the Operative Documents Agreements will be treated for federal income tax purposes as derived from, or allocable to, sources within outside the United States; (d) the Federal rate of tax on the taxable income of Lessor ; The foregoing assumptions will be 34%; (e) Owner Participant, as appropriately modified or adjusted from time to time to reflect the owner occurrence of the Facility Assets as of the Closing Date, will be entitled to such deductions, credits and other benefits as are provided by the Code to an owner of property, including (A) as to event for which an amount (the "Seven-year Amount") equal to 97.800% of Lessor's Cost, deductions for cost recovery with respect to the Facility Assets under Section 168(b)(1) of the Code computed using a seven-year recovery period, the 200% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 14.29% of the Seven-year Amount in the taxable year of Lessor that includes the Closing Date and 24.49%, l7.49%, 12.49%, 8.93%, 8.92%, 8.93% and 4.46% of the Seven-year Amount (such percentages to be calculated to more than two decimal places for purposes of determining the actual deductions) in its succeeding seven taxable years, respectively, (B) an to an amount (the "Nonresidential Real Property Amount") equal to 7.012% of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computed using a 31.5-year recovery period, the straight-line method and the mid-month convention, resulting in deductions in an amount equal to 3.042% of the Nonresidential Real Property Amount in the taxable year of Lessor that includes the Closing Date, 3.175% in the succeeding thirty taxable years and 1.720% in the last taxable year and (C) as to an amount (the "Fifteen-year amount" equal to .005% % of Lessor's Cost, deductions for cost recovery with respect to the Facility under Section 168(b) of the Code computer using a fifteen-year recovery period, the 150% declining-balance method (switching to straight-line) and the half-year convention, resulting in deductions in an amount equal to 5.00% of the Fifteen-year Amount in the taxable year of Lessor that includes the Closing Date and 9.50%, 8.55%, 7.70%, 6.93%, 6.23%, 5.90%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91%, 5.90%, 5.91% and 2.95% in its succeeding fifteen taxable years, respectively (the deductions referred to in clauses (A), (B) and (c) being hereinafter referred to as the "MACRS Deductions"); (f) neither Owner Participant, Lessor nor the Trust Estate will at any time be required for Federal income tax purposes to include in its gross income any amount with respect to the transactions contemplated by the Operative Documents other than (i) payments of Basic Rent in the amounts specified herein accrued ratably over the six-month period preceding the date on which each such payment is required to be made; (ii) the amount of any payment of Stipulated Loss Value on the date such amount is indemnity has been paid under this Lease (but not earlier than the date an which such amount is required to be paid under this Lease); (iii) any amount paid to Lessor or Owner Participant and specifically identified as interest under the Operative Documents on the date such amount is paid; (iv) any amount paid to Lessor or Owner Participant under the Operative Documents, the calculation of which is specifically determined under the Operative Documents to include any amount necessary to hold Lessor or Owner Participant harmless against the income tax consequences of the receipt or accrual thereof; (v) any amount to the extent offset in the same taxable year of Lessee or Owner Participant in which such amount is included in income by a related deduction of the same tax character which deduction is not otherwise taken into account pursuant to this Section 9.01; (vi) payment by Lessee, of the purchase option price pursuant to its exercise of its purchase option pursuant to Section 4.02 on the date such amount is paid; and (vii) the "good-faith deposit" referred to in Section 6.01(c) of the Participation Agreement, if such good-faith deposit is retained by Owner Participant pursuant to clause (ii) of that Section 6.01(c); (g) Lessor's taxable year that includes the Closing Date will be a full taxable year consisting of 12 months and each taxable year of Lessor thereafter will be the calendar year ending December 31; and (h) Owner Participant will be entitled for Federal income tax purposes to (A) deductions with respect to interest on the Loan Certificates in the amounts and at the times interest is stated to accrue on the Loan Certificates pursuant to Section 163 of the Code and to current deductions with respect to premium, if any, and all other amounts (except principal) paid or accrued on the Loan Certificates (such deductions hereinafter referred to as the "Interest Deductions") and (B) deductions with respect to the amortization of an amount equal to Transaction Expenses with respect to the Facility ratably over the Interim and Basic Terms (such deductions hereinafter referred to as the "Amortization Deductions"). For purposes of Section 9.01(e), the term "Lessor's Cost" does not include any Alterations financed by Lessor or Owner Participant. At the time of any such financing, the assumptions set forth in this Section 9.01 shall be revised to reflect the assumptions applicable to such Alterations.