Common use of Tax Reporting and Characterization Clause in Contracts

Tax Reporting and Characterization. (a) To the fullest extent permitted by law, the Member and the Holder of each Series agree that solely for U.S. federal, state and local income and franchise tax purposes it will either treat its interest in the related Series Interest as a direct ownership interest in the related Series Assets or treat the applicable Series as a separate entity under the principles of Treas. Reg. § 301.7701-3 and Treas. Reg. § 301.7701-4 (that is also a separate from any other Series). Under the latter treatment, if an applicable Series has more than one owner for U.S. federal income tax purposes, the Series shall be intended to qualify as a partnership for such tax purposes that has elected out of partnership status under section 761 of the Code (and analogous state tax law). (b) None of the Holders, the Registered Pledgees or the other parties to or bound by this Agreement will elect or permit an election to be made to treat the Company or any Series as an association taxable as a corporation for U.S. federal income tax purposes pursuant to Treas. Reg. § 301.7701-3. Each party agrees that it will not take any action (including filing any tax return) that is inconsistent with this Section 2.6 unless required to do so by the relevant tax authority.