Short Years Clause Samples
The "Short Years" clause defines how certain contractual calculations, such as rent, fees, or other periodic payments, are adjusted when a contract term does not cover a full calendar or fiscal year. Typically, this clause specifies that payments for partial years are prorated based on the actual number of days or months the contract is in effect during that period. For example, if a lease begins or ends partway through a year, the rent due for that year would be calculated proportionally. The core function of this clause is to ensure fairness and accuracy in financial obligations when the contract does not align perfectly with standard annual periods.
Short Years. If a Consolidated or Combined Return is filed with respect to a Tax Year, and if TODCO and its eligible Subsidiaries are not included in such Consolidated or Combined Return for that entire Tax Year, then for purposes of determining the Income Taxes attributable to or imposed on the TODCO Tax Group for the resulting short Consolidated or Combined Year and the short Separate Return Year, all calculations shall be made by (x) closing the books of the TODCO Tax Group at the end of the month preceding the month in which the first short year ends, (y) closing the books of TODCO Tax Group again at the end of the month in which the first short year ends, and (z) apportioning Tax Items accruing in the month in which the first short year ends to each short year pro rata in proportion to the number of days in such month that are within each short year. Notwithstanding clause (z) of the immediately preceding sentence, all Tax Items that are extraordinary items within the meaning of Treasury Regulations Section 1.1502-76(b)(2)(ii)(C) shall be allocated to the short year in which they accrue; provided, however, that the principles of Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) (Next Day Rule) shall apply in determining the proper allocation of extraordinary items accruing on the last day of the earlier short Tax Year.