Common use of TAX GROSS Clause in Contracts

TAX GROSS. Up Amount. TrAILCo’s liability for the cost consequences of any current tax liability under this Article 5.12 shall be calculated on a fully grossed‐up basis. Except as may otherwise be agreed to by the Parties, this means that TrAILCo will pay NYSEG, in addition to the amount paid for the NYSEG System Upgrade Facilities, an amount equal to (1) the current taxes imposed on NYSEG (“Current Taxes”) on the excess of (a) the gross income realized by NYSEG as a result of payments or property transfers made by TrAILCo to NYSEG under this Agreement (without regard to any payments under this Article 5.12) (the “Gross Income Amount”) over (b) the present value of future tax deductions for depreciation that will be available as a result of such payments or property transfers (the “Present Value Depreciation Amount”), plus (2) an additional amount sufficient to permit NYSEG to receive and retain, after the payment of all Current Taxes, an amount equal to the net amount described in clause (1). For this purpose, (i) Current Taxes shall be computed based on NYSEG’s composite federal and state tax rates at the time the payments or property transfers are received and NYSEG will be treated as being subject to tax at the highest marginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present Value Depreciation Amount shall be computed by discounting NYSEG’s anticipated tax depreciation deductions as a result of such payments or property transfers by NYSEG’s current weighted average cost of capital. Thus, the formula for calculating TrAILCo’s liability to NYSEG pursuant to this Article 5.12.4 can be expressed as follows: (Current Tax Rate x (Gross Income Amount ‐ Present Value of Tax Depreciation))/(1 ‐ Current Tax Rate).

TAX GROSS. Up Amount. TrAILCo’s liability for the cost consequences of any current tax liability under this Article 5.12 shall be calculated on a fully grossed‐up basis. Except as may otherwise be agreed to by the Parties, this means that TrAILCo will pay NYSEG, in addition to the amount paid for the NYSEG System Upgrade Facilities, an amount equal to (1) the current taxes imposed on NYSEG (“Current Taxes”) on the excess of (a) the gross income realized by NYSEG as a result of payments or property transfers made by TrAILCo to NYSEG under this Agreement (without regard to any payments under this Article 5.12) (the “Gross Income Amount”) over (b) the present value of future tax deductions for depreciation that will be available as a result of such payments or property transfers (the “Present Value Depreciation Amount”), plus (2) an additional amount sufficient to permit NYSEG to receive and retain, after the payment of all Current Taxes, an amount equal to the net amount described in clause (1). For this purpose, (i) Current Taxes shall be computed based on NYSEG’s composite federal and state tax rates at the time the payments or property transfers are received and NYSEG will be treated as being subject to tax at the highest marginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present Value Depreciation Amount shall be computed by discounting NYSEG’s anticipated tax depreciation deductions as a result of such payments or property transfers by NYSEG’s current weighted average cost of capital. Thus, the formula for calculating TrAILCo’s liability to NYSEG pursuant to this Article 5.12.4 can be expressed as follows: (Current Tax Rate x (Gross Income Amount ‐ Present Value of Tax Depreciation))/(1 ‐ Current Tax Rate).. SERVICE AGREEMENT NO. 2257

TAX GROSS. Up Amount. TrAILCo’s liability for the cost consequences of any current tax liability under this Article 5.12 shall be calculated on a fully grossed‐up basis. Except as may otherwise be agreed to by the Parties, this means that TrAILCo will pay NYSEG, in addition to the amount paid for the NYSEG System Upgrade Facilities, an amount equal to (1) the current taxes imposed on NYSEG (“Current Taxes”) on the excess of (a) the gross income realized by NYSEG as a result of payments or property transfers made by TrAILCo to NYSEG under this Agreement (without regard to any payments under this Article 5.12) (the “Gross Income Amount”) over (b) the present value of future tax deductions for depreciation that will be available as a result of such payments or property transfers (the “Present Value Depreciation Amount”), plus (2) an additional amount sufficient to permit NYSEG to receive and retain, after the payment of all Current Taxes, an amount equal to the net amount described in clause (1). For this purpose, (i) Current Taxes shall be computed based on NYSEG’s composite federal and state tax rates at the time the payments or property transfers are received and NYSEG will be treated as being subject to tax at the highest marginal rates in effect at that time (the “Current Tax Rate”), and (ii) the Present Value Depreciation Amount shall be computed by discounting NYSEG’s anticipated tax depreciation deductions as a result of such payments or property transfers by NYSEG’s current weighted average cost of capital. Thus, the formula for calculating TrAILCo’s liability to NYSEG pursuant to this Article 5.12.4 can be expressed as SERVICE AGREEMENT NO. 2232 follows: (Current Tax Rate x (Gross Income Amount ‐ Present Value of Tax Depreciation))/(1 ‐ Current Tax Rate).