Common use of Carryover Basis Clause in Contracts

Carryover Basis. The parties confirm that (i) the interests in the Participating Entities will be contributed to the Company at the Closing in a tax-free contribution to the Company under Section 351(a) of the Code (and then by the Company to the Operating Partnership in a tax-free contribution under Section 721 of the Code); provided, that the Contributors shall recognize income upon such contribution to the extent required by Sections 351 and 357(c) of the Code (with respect to the assumption of the Contributors’ liabilities and the Tax Coverage Payment under Section 1.2 constituting boot, and other liabilities assumed with respect to the Participating Interests in excess of basis); (ii) the Company and the Operating Partnership will have a carryover basis in the Participating Entity Interests equal to that of the Contributors (plus gain recognized by the Contributors on the contribution under Section 351 and Section 357(c) of the Code); (iii) the estimated tax basis of the Properties owned by such Participating Entities (which amount is set forth on Exhibit F) is less than their aggregate fair market value at the Closing, as a result of which there is inherent gain (“Inherent Gain”) in the hands of the Operating Partnership upon contribution; and (iv) the Operating Partnership and the Company will recognize the full amount of such Inherent Gain upon the sale of the Participating Entity Interests or underlying Property in a taxable transaction without any claim against Contributors with respect thereto by the Operating Partnership or the Company.

Carryover Basis. The parties confirm that (i) the interests in the Participating Entities will be contributed to the Company at the Closing in a tax-free contribution to the Company under Section 351(a) of the Code (and then by the Company to the Operating Partnership in a tax-free contribution under Section 721 of the Code); provided, that the Contributors shall recognize income upon such contribution to the extent required by Sections 351 and 357(c) of the Code (with respect to the assumption of the Contributors’ liabilities and the Tax Coverage Payment under Section 1.2 constituting boot, and other liabilities assumed with respect to the Participating Interests in excess of basis); (ii) the Company and the Operating Partnership will have a carryover basis in the Participating Entity Interests equal to that of the Contributors (plus gain recognized by the Contributors on the contribution under Section 351 and Section 357(c) of the Code); (iii) the estimated tax basis of the Properties owned by such Participating Entities (which amount is set forth on Exhibit F) is less than their aggregate fair market value at the Closing, as a result of which there is inherent gain (“Inherent Gain”) in the hands of the Operating Partnership upon contribution; and (iv) the Operating Partnership and the Company will recognize the full amount of such Inherent Gain upon the sale of the Participating Entity Interests or underlying Property in a taxable transaction without any claim against Contributors with respect thereto by the Operating Partnership or the CompanyCompany (but subject to the forfeiture provisions of Section 1.10).