Common use of Section 704(c) Allocation Clause in Contracts

Section 704(c) Allocation. Any item of income, gain, loss and deduction for federal income tax purposes with respect to any Trust property that has been contributed by an Owner to the capital of the Trust and which is required to be allocated for federal income tax purposes under Section 704(c) of the Code so as to take into account the variation between the adjusted tax basis of such property and its agreed upon fair market value at the time of its contribution shall be allocated to the Owners solely for federal income tax purposes in the manner so required. In the event of the occurrence of any event described in clause (x), (y) or (z) of the second paragraph of Section 3.02 hereof, subsequent allocations of income, gain, loss and deduction with respect to such property shall take account of any variation between the adjusted basis of such property to the Trust for federal income tax purposes and its fair market value immediately after the adjustment in the same manner as under Section 704(c) of the Code and the Treasury Regulations thereunder. Any elections or other decisions relating to such allocations shall be made by the Board of Managers in a manner that reasonably reflects the purpose and intention of this Agreement. Allocations pursuant to this Section 3.08(b) are solely for income tax purposes and shall not affect, or in any way be taken into account in computing, for book purposes, any Owner’s Capital Account pursuant to any provision of this Agreement.