Redetermination of Tax Detriments Allocated to Chesapeake Sample Clauses

Redetermination of Tax Detriments Allocated to Chesapeake. On its 2014 U.S. federal consolidated income Tax Return, the Chesapeake consolidated group reports no consolidated net taxable income, an NOL of $100x, and no Tax liability. $50x of the NOL consists of Tax Items that are deemed to arise from the operation or ownership of the Chesapeake Business and the remaining $50x consists of Tax Items that are deemed to arise from the operation or ownership of the SSE Business. Because no Tax is owed on the Joint Return, no payments are required to be made under this Agreement. In 2016, the Tax Authority initiates a Tax Contest with respect to the 2014 Joint Return. In the Tax Contest, the Tax Authority asserts that an additional $100x of taxable income must be reported on the 2014 Joint Return. Such additional taxable income arose from the Chesapeake Business. Pursuant to Section 5.2(a), Chesapeake is the Controlling Party with respect to the Tax Contest because it involves a Tax reported on a Tax Return for which Chesapeake is the Preparer. On December 31, 2016, a date subsequent to the Spin-off Date, Chesapeake agrees to enter into a closing agreement with the Tax Authority and recognize $100x of additional taxable income in 2014 in settlement of the Tax Contest. As a result of the closing agreement, Section 4.3(b) requires that the amounts paid under this Agreement be redetermined. Under applicable Tax Law and pursuant to Section 2.1(a)(ii) and Section 2.1(a)(iv), Chesapeake is entitled to use the $100x NOL as a Tax Benefit to completely offset the additional taxable income recognized as a result of the Tax Contest. Chesapeake is not required to reimburse SSE for the use of the $50x portion of such NOL that arose from the operation or ownership of the SSE Business.