TO BE SO ALLOCATED SHALL BE DETERMINED IN
ACCORDANCE WITH REGULATIONS SECTION 1.704-2(I)(4).
THIS SECTION 6.3(C) IS
INTENDED TO COMPLY WITH THE MINIMUM GAIN CHARGEBACK REQUIREMENT IN SUCH
SECTION OF THE REGULATIONS AND SHALL BE INTERPRETED CONSISTENTLY THEREWITH.
SOLELY FOR PURPOSES OF THIS SECTION 6.3(C), EACH MEMBER'S ADJUSTED CAPITAL
ACCOUNT DEFICIT SHALL BE DETERMINED PRIOR TO ANY OTHER ALLOCATIONS PURSUANT TO
ARTICLE VI OF THIS AGREEMENT WITH RESPECT TO SUCH FISCAL YEAR, OTHER THAN
ALLOCATIONS PURSUANT TO SECTIONS 6.3(A) AND 6.3(B) HEREOF.
(D)
QUALIFIED INCOME OFFSET.
IN THE EVENT ANY
MEMBER UNEXPECTEDLY RECEIVES ANY ADJUSTMENTS, ALLOCATIONS OR DISTRIBUTIONS
DESCRIBED IN REGULATIONS SECTIONS 1.704-1(B)(2)(II)(D)(4),
1.704-1(B)(2)(II)(D)(5), OR 1.704-1(B)(2)(II)(D)(6), AND AFTER GIVING EFFECT TO
THE ALLOCATIONS REQUIRED UNDER SECTIONS 6.3(A), 6.3(B) AND 6.3(C) HEREOF, SUCH
MEMBER HAS AN ADJUSTED CAPITAL ACCOUNT DEFICIT, ITEMS OF COMPANY INCOME AND GAIN
SHALL BE SPECIALLY ALLOCATED TO SUCH MEMBER IN AN AMOUNT AND MANNER SUFFICIENT
TO ELIMINATE, TO THE EXTENT REQUIRED BY THE REGULATIONS, ITS ADJUSTED CAPITAL
ACCOUNT DEFICIT CREATED BY SUCH ADJUSTMENTS, ALLOCATIONS OR DISTRIBUTIONS AS
QUICKLY AS POSSIBLE.
IT IS INTENDED THAT THIS SECTION 6.3(D) QUALIFY AND BE
CONSTRUED AS A "QUALIFIED INCOME OFFSET" WITHIN THE MEANING OF REGULATIONS
1.704-1(B)(2)(II)(D), WHICH SHALL BE CONTROLLING IN THE EVENT OF A CONFLICT
BETWEEN SUCH REGULATIONS AND THIS SECTION 6.3(D).
(E)
NONRECOURSE DEDUCTIONS.
NONRECOURSE
DEDUCTIONS FOR ANY TAXABLE PERIOD SHALL BE ALLOCATED TO THE MEMBERS IN THE
MANNER DETERMINED BY THE MANAGING MEMBER, PROVIDED THAT SUCH ALLOCATION SHALL BE
PERMISSIBLE UNDER SECTION 704(B) OF THE CODE.
(F)
PARTNER NONRECOURSE DEDUCTIONS.
ANY
PARTNER NONRECOURSE DEDUCTIONS FOR ANY FISCAL YEAR SHALL BE SPECIALLY ALLOCATED
TO THE MEMBER WHO BEARS THE ECONOMIC RISK OF LOSS WITH RESPECT TO THE PARTNER
NONRECOURSE DEBT TO WHICH SUCH PARTNER NONRECOURSE DEDUCTIONS ARE ATTRIBUTABLE
IN ACCORDANCE WITH REGULATIONS SECTIONS 1.704-2(B)(4) AND 1.704-2(I)(2).
(G)
CODE SECTION 754 ADJUSTMENTS.
TO THE EXTENT
AN ADJUSTMENT TO THE ADJUSTED TAX BASIS OF ANY COMPANY ASSET PURSUANT TO
SECTION 734(B) OR 743(B) OF THE CODE IS REQUIRED, PURSUANT TO REGULATIONS
SECTION 1.704-1(B)(2)(IV)(M), TO BE TAKEN INTO ACCOUNT IN DETERMINING CAPITAL
ACCOUNTS, THE AMOUNT OF SUCH ADJUSTMENT TO THE CAPITAL ACCOUNTS SHALL BE
SPECIALLY ALLOCATED TO THE MEMBERS IN A MANNER CONSISTENT WITH THE MANNER IN
WHICH THEIR CAPITAL ACCOUNTS ARE REQUIRED TO BE ADJUSTED PURSUANT TO SUCH
SECTION OF THE REGULATIONS.
30
SECTION 6.4
ALLOCATIONS FOR TAX PURPOSES.
(A)
GENERAL.
EXCEPT AS OTHERWISE PROVIDED IN
THIS SECTION 6.4, FOR FEDERAL INCOME TAX PURPOSES, EACH ITEM OF INCOME, GAIN,
LOSS AND DEDUCTION SHALL BE ALLOCATED AMONG THE MEMBERS IN THE SAME MANNER AS
ITS CORRELATIVE ITEM OF "BOOK" INCOME, GAIN, LOSS OR DEDUCTION IS ALLOCATED
PURSUANT TO SECTIONS 6.1 AND 6.3 OF THIS AGREEMENT.
(B)
TO ELIMINATE BOOK-TAX DISPARITIES.
IN AN
ATTEMPT TO ELIMINATE BOOK-TAX DISPARITIES ATTRIBUTABLE TO A CONTRIBUTED PROPERTY
OR ADJUSTED PROPERTY, ITEMS OF INCOME, GAIN, LOSS, AND DEDUCTION SHALL BE
ALLOCATED FOR FEDERAL INCOME TAX PURPOSES AMONG THE MEMBERS AS FOLLOWS:
(1)
(I)
IN THE CASE OF A CONTRIBUTED PROPERTY,
SUCH ITEMS ATTRIBUTABLE THERETO SHALL BE ALLOCATED