Tax Refund Adjustment Clause Samples
A Tax Refund Adjustment clause outlines the process for handling any tax refunds or credits that may arise after a transaction has closed. Typically, this clause specifies which party is entitled to receive the benefit of such refunds, how claims for refunds should be pursued, and the obligations of each party to cooperate in securing the refund. Its core practical function is to ensure that any tax benefits related to the transaction are allocated fairly and transparently, preventing disputes over unexpected tax recoveries.
Tax Refund Adjustment. If
(1) there shall be any amount of Tax (or Liability in respect thereof) (A) paid prior to Closing by MSJS, or (B) by which the net asset value of the MSJS Contributed Business is reduced in MS’s Final Closing Balance Sheet (including through a reduction attributable to a reduction of deferred tax assets of MSJS due to such Tax), in each case by reason of an assessment or demand (or anticipated assessment or demand) for Tax by the Japanese tax authorities made or expected to be made as a result of the tax audit of MSJS referred to in the MS Disclosure Letter, and (2) MSMS shall subsequently receive a refund of or otherwise recover all or a portion of such Tax (for which purposes a refund or recovery shall include an increase in deferred tax assets of MSMS and any reversal of any accrual for such Tax in the financial statements of MSMS), then, within forty (40) Business Days of notice from MSMS to MUFG that it has received such refund or other recovery or such refund or recovery has occurred, in addition to the other payments provided for in this Section 1.6, MUFG shall cause MUSHD to pay to MSHD an amount equal to the MUFG Ownership Percentage multiplied by the amount of such refund or recovery (including any interest or premium paid or credited by any Governmental Authority thereon). Any payment made pursuant to this Section 1.6(h) shall be treated as a further adjustment (without interest) to any amount payable based on Final Closing Balance Sheets.