Multiple indebtedness Clause Samples
The Multiple Indebtedness clause defines how a borrower's various debts to a lender are treated under an agreement, typically by consolidating or cross-referencing multiple obligations. In practice, this clause ensures that all current and future debts, whether arising from different loans, credit facilities, or other financial arrangements with the same lender, are considered collectively. This approach allows the lender to treat all outstanding amounts as a single pool of debt, which can simplify enforcement and collateral arrangements, and helps prevent the borrower from prioritizing repayment of one debt over another owed to the same lender.
Multiple indebtedness. Time at which adjustments to basis of indebtedness are effective.
Multiple indebtedness. If a share- holder holds more than one indebted- ness at the close of the corporation’s taxable year or, if applicable, imme- diately prior to the termination of the shareholder’s interest in the corpora- tion, the reduction in basis is applied to each indebtedness in the same pro- portion that the basis of each indebted- ness bears to the aggregate bases of the indebtedness to the shareholder.
Multiple indebtedness. If a share- holder holds more than one indebted- ness (including any open account debt and any debt treated as a single indebt- edness under paragraph (a)(2)(ii) of this section) as of the beginning of an S cor- poration’s taxable year, any net in- crease is applied first to restore the re- duction of basis in any indebtedness re- paid (in whole or in part) in that tax- able year to the extent necessary to offset any gain that would otherwise be realized on the repayment. Any re- maining net increase is applied to re- store each outstanding indebtedness (including any open account debt and any debt treated as a single indebted- ness under paragraph (a)(2)(ii) of this section) in proportion to the amount that the basis of each outstanding in- debtedness has been reduced under sec- tion 1367(b)(2)(A) and paragraph (b) of this section and not restored under sec- tion 1367(b)(2)(B) and this paragraph (c).
(d) Time at which adjustments to basis of indebtedness are effective—
(1) In general. The amounts of the ad- justments to basis of indebtedness (in- cluding open account debt) provided in section 1367(b)(2) and this section are determined as of the close of the S cor- poration’s taxable year, and the adjust- ments are generally effective as of the close of the S corporation’s taxable year. However, if the shareholder is not a shareholder in the S corporation at that time, these adjustments are effec- tive immediately before the share- holder terminates his or her interest in the S corporation. Except as provided in paragraph (d)(2) of this section, if a debt is disposed of or repaid in whole or in part before the close of the taxable year, the basis of that indebtedness is restored under paragraph (c) of this section, effective immediately before the disposition or the first repayment on the debt during the taxable year. To the extent any indebtedness of the S corporation to the shareholder is dis- posed of or repaid (in whole or in part) during the taxable year and the share- holder’s basis in that indebtedness has been reduced under paragraph (b) of this section and is not restored com- pletely under paragraph (c) of this sec- tion, the disposition or repayment is a recognition event effective imme- diately before the indebtedness is dis- posed of or repaid (in whole or in part).
Multiple indebtedness. Restoration of basis.