Common use of Tax Allocations; Code Clause in Contracts

Tax Allocations; Code. Section 704(c). (a) The income, gains, losses, deductions and expenses of the JV shall be allocated, for U.S. federal, state and local income tax purposes, among the Shareholders in accordance with the allocation of such income, gains, losses, deductions and expenses among the Shareholders for purposes of computing their Capital Accounts, except that if any such allocation is not permitted by the Code or other applicable law, the JV's subsequent income, gains, losses, deductions and expenses shall be allocated among the Shareholders so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts. (b) In accordance with Code Section 704(c) and the Treasury Regulations thereunder, items of income, gain, loss, deduction and expense with respect to any property contributed to the capital of the JV shall, solely for tax purposes, be allocated among the Shareholders so as to take account of any variation between the adjusted basis of such property to the JV for U.S. federal income tax purposes and its Book Value at the time of contribution. The Board shall adopt any method approved under Code Section 704(c) and the Treasury Regulations thereunder for taking into account any such variation. (c) If the Book Value of any JV asset is adjusted pursuant to Treasury Regulation Section 1.704‑1(b)(2)(iv)(e) or (f), subsequent allocations of items of taxable income, gain, loss, deduction and expense with respect to such asset shall take account of any variation between the adjusted basis of such asset for U.S. federal income tax purposes and its Book Value. The Board shall be entitled to adopt any method permissible under Code Section 704(c) and the Treasury Regulations thereunder for taking into account any such variation. (d) Allocations pursuant to this clause 3.3(d) are solely for purposes of U.S. federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Shareholder's Capital Account or share of Profits, Losses, other items or distributions pursuant to any provisions of this agreement.