Compliance with Section 704(b) of the Code Clause Samples
The "Compliance with Section 704(b) of the Code" clause ensures that the allocation of income, gains, losses, and deductions among partners in a partnership adheres to the requirements set forth in Section 704(b) of the Internal Revenue Code. In practice, this means that the partnership agreement must allocate tax items in a manner that has "substantial economic effect" or is otherwise in accordance with the partners' interests in the partnership, as defined by IRS regulations. This clause is essential for maintaining the intended tax treatment of partnership allocations and for preventing the IRS from recharacterizing allocations in a way that could result in unexpected tax consequences for the partners.
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Compliance with Section 704(b) of the Code. The provisions of this Agreement as they relate to the maintenance of Capital Accounts are intended, and will be construed, and, if necessary, modified to cause the allocations of profits, losses, income, gain and credit to have substantial economic effect under the Regulations promulgated under Section 704(b) of the Code, in light of the Distributions made pursuant to Article V and the Contributions made pursuant to Article IV. Notwithstanding anything herein to the contrary, this Agreement will not be construed as creating a deficit restoration obligation or otherwise personally obligate any Partner to make a Contribution in excess of the initial Contribution and additional Contribution, if any, of the Partner. The Partnership will (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership’s balance sheet, as computed for book purposes, in accordance with Reg. §1.704-1(b)(iv)(g), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Reg. §1.704-1(b).
Compliance with Section 704(b) of the Code. As they relate to the maintenance of Capital Accounts, the provisions of this Article are intended, shall be construed, and if necessary, modified to cause the allocations of Net Profits, Net Losses, income, gain and credit pursuant to Article VIII to have substantial economic effect under the regulations promulgated under Section 704(b) of the Code, in light of any distributions made to the Members and Economic Interest Owners and the Capital Contributions made pursuant to this Article.
Compliance with Section 704(b) of the Code. The provisions of this Article as they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified to cause the allocations of profits, losses, income, gain and credit pursuant to Article V to have substantial economic effect under the Treasury Regulations promulgated under Section 704(b) of the Code, in light of the distributions made pursuant to Articles V and XI and the contributions made pursuant to Article IV. Notwithstanding anything herein to the contrary, this Agreement shall not be construed as creating a deficit restoration obligation or otherwise personally obligate any Member or Transferee to make a contribution in excess of the initial contribution or additional contribution agreed to by a Majority in Interest of the Members of the Company.
Compliance with Section 704(b) of the Code. The allocation provisions contained in this Article V are intended to comply with Section 704(b) of the Code and the Regulations promulgated thereunder, and shall be interpreted and applied in a manner consistent therewith.
Compliance with Section 704(b) of the Code. The provisions of this Article as they relate to the maintenance of Capital Accounts (other than Section 6.4(iii)) are intended, and shall be construed, and, if necessary, modified, to cause the allocations of profits, losses, income, gain and credits pursuant to Article VII to have substantial economic effect under the Regulations promulgated under Section 704(b) of the Code, in light of the distributions made pursuant to Article VII and the contributions to the Company made pursuant to this Article. Notwithstanding anything herein to the contrary, this Agreement shall not be construed as creating a deficit restoration obligation or to otherwise personally obligate any Member to make a contribution in excess of the contribution of the Member required by Section 6.1.
Compliance with Section 704(b) of the Code. The provisions of this Agreement as they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified to cause the allocations of profits, losses, income, gains and credits pursuant to this Agreement to have substantial economic effect under the Regulations promulgated under §704(b) of the Code, in view of the distributions and capital contributions made pursuant to this Agreement.
Compliance with Section 704(b) of the Code. The provisions of this Article VIII as they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified to cause the allocations of profits, losses, income, gain and credit pursuant to Article X to have substantial economic effect under the Treasury Regulations promulgated under §704(b) of the Code, in light of the distributions made pursuant to Article IX and the Capital Contributions made pursuant to this Article VIII. Notwithstanding anything herein to the contrary, this Operating Agreement shall not be construed as creating a deficit restoration obligation or otherwise personally obligate any Member to make a Capital Contribution in excess of the Initial Capital Contribution.
Compliance with Section 704(b) of the Code. The foregoing provisions and the other provisions of this Operating Agreement relating to the maintenance of capital accounts are intended to comply with Section 704(b) of the Internal Revenue Code of 1986, as amended and applicable Treasury Regulations promulgated thereunder and shall be interpreted and applied in a manner consistent therewith. If, in the opinion of the Company’s accountants, the manner in which capital accounts are to be maintained pursuant to this Operating Agreement should be modified in order to comply with Section 704(b) of the Code and the Regulations thereunder, then notwithstanding anything to the contrary contained in the preceding provisions of this Article IV, the method in which the capital accounts are maintained shall be so modified provided, however, that any change in the manner of maintaining capital accounts shall not materially alter the economic agreement between or among the Members.
Compliance with Section 704(b) of the Code. The provisions of this Article 4 as they relate to the maintenance of Capital Accounts are intended, and shall be construed, and, if necessary, modified, to cause the allocations of Net Profits, Net Losses, and other items of income, gain, loss, deduction and credit pursuant to Article 5 to be respected under the Regulations promulgated under § 704(b) of the Code, in light of the Distributions made pursuant to Article 5 and the Capital Contributions made pursuant to this Article 4.52 In the event the Members shall determine that it is prudent to modify the manner in which Capital Accounts are computed in order to comply with the Allocation Rules, the Members hereby agree that they will not unreasonably withhold their consent to any modification that is reasonably required to so comply, provided that such modification is not likely materially to affect the amounts distributable to any Member.53 52 This provision is intended to facilitate compliance with the Treasury Regulations if the law changes or tax advisors to the LLC believe that a change is appropriate.
Compliance with Section 704(b) of the Code. The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulations. In the event the Management Committee determines that it is prudent to modify the manner in which the Capital Accounts are computed in order to comply with such Regulations, the Management Committee may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Member upon dissolution of the Company. The Management Committee also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of the Company capital reflected on the Company’s balance sheet, as computed for book purposes in accordance with Regulations section 1.704-1(b)(2)(iv)(g) and (ii) make any appropriate modifications in unanticipated events might otherwise cause this Agreement not to comply with the Regulations.