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

Section 704(c) Items. In accordance with Section 704(c) of the Code and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for U.S. federal income tax purposes and its initial Gross Asset Value. If the Gross Asset Value of a Company asset is adjusted pursuant to clause (b) of the definition of Gross Asset Value, subsequent allocations of income, gain, loss, and deduction with respect to such asset for tax purposes shall take account of any variation between the adjusted basis of such asset for U.S. federal income tax purposes and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the Regulations thereunder. For purposes of applying the principles of Section 704(c) of the Code, the Company shall use the “traditional method with curative allocations” of Regulations Section 1.704-3(c), provided, however, that the curative allocations shall be made only in connection with a sale of substantially all of the Company property (including a hypothetical sale under Regulations Section 1.743-1(d)(2)) and shall be limited solely to allocations of income or gain from the disposition of Company property the cost recovery from which has been limited by the ceiling rule throughout the term of the Company.