Common use of Multiple indebtedness Clause in Contracts

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).