INTEREST IN ANY PROPERTY OWNER WHICH
(IMMEDIATELY PRIOR TO FIRST UNION'S PURCHASE) IS A DISREGARDED ENTITY OF THE
MARC MEMBER FROM WHICH FIRST UNION IS PURCHASING THE INTEREST SHALL BE TREATED,
FOR FEDERAL INCOME TAX PURPOSES, AS (1) FIRST UNION'S PURCHASING FOR THE
APPLICABLE FIRST UNION PURCHASE PRICE, AN UNDIVIDED INTEREST IN THE PROPERTY
OWNED BY THE APPLICABLE PROPERTY OWNER, IMMEDIATELY FOLLOWED BY (2) A DEEMED
CONTRIBUTION OF THE PROPERTY BY THE MARC MEMBER AND FIRST UNION TO THE ENTITY IN
WHICH FIRST UNION IS ACQUIRING AN INTEREST, RESULTING IN AN INITIAL CAPITAL
ACCOUNT BALANCE WITH RESPECT TO SUCH ENTITY FOR EACH OF THE MARC MEMBERS AND
FIRST UNION EQUAL TO THE MARC DEEMED EQUITY OR FIRST UNION DEEMED EQUITY, AS THE
APPLICABLE, DIVIDED BY THE SUM OF THE MARC DEEMED EQUITY AND THE FIRST UNION
41
DEEMED EQUITY WITH RESPECT TO THE UNDERLYING PROPERTY.
FOR FEDERAL INCOME TAX
PURPOSES, THE FIRST UNION PURCHASE PRICE FOR EACH PROPERTY SHALL BE ALLOCATED
AMONG THE LAND, IMPROVEMENTS AND OTHER COMPONENTS OF EACH PROPERTY IN THE MANNER
REASONABLY DETERMINED BY FIRST UNION.
THE PARTIES AGREE TO FILE AND CAUSE TO BE
FILED ALL TAX RETURNS AND CLAIMS AND OTHER STATEMENTS CONSISTENT WITH THE
FOREGOING.
(E)
IN CONNECTION WITH FIRST UNION'S PURCHASE OF ANY INTEREST IN ANY
PROPERTY OWNER OR OTHER ENTITY THAT (IMMEDIATELY PRIOR TO FIRST UNION'S
PURCHASE) IS TREATED AS A PARTNERSHIP FOR INCOME TAX PURPOSES, THE PARTIES AGREE
THAT SUCH ENTITY SHALL BE TREATED AS A PARTNERSHIP FOR FEDERAL INCOME TAX
PURPOSES AND THE PARTIES SHALL CAUSE THE PROPERTY OWNER TO MAKE AN ELECTION
UNDER SECTIONS 743 AND 754 OF THE CODE (AND ANY CORRESPONDING PROVISIONS OF
STATE AND LOCAL TAX LAW), EFFECTIVE WITH RESPECT TO THE TRANSFER OF THE INTEREST
IN SUCH ENTITY TO FIRST UNION, TO ADJUST ITS TAX BASIS IN ITS ASSETS WITH
RESPECT TO FIRST UNION.
IF FIRST UNION'S PURCHASE CAUSES A TAX TERMINATION
(WITHIN THE MEANING OF SECTION 708(B)(1)(B) OF THE CODE) OF THE ENTITY, THE
PARTIES AGREE TO CAUSE THE PROPERTY OWNER TO CAUSE SUCH ELECTION TO BE MADE BY
SUCH ENTITY ON ITS FEDERAL (AND ANY CORRESPONDING STATE AND LOCAL) INCOME TAX
RETURN FOR ITS TAXABLE YEAR THAT ENDS WITH THE DATE OF FIRST UNION'S
PURCHASE,.
ALL RESULTING TAX BASIS ADJUSTMENTS SHALL BE MADE BASED ON THE
APPLICABLE FIRST UNION PURCHASE PRICE IN ACCORDANCE WITH THE ALLOCATION
SCHEDULE REASONABLY DETERMINED BY FIRST UNION.
(F)
FIRST UNION SHALL HAVE THE RIGHT TO REVIEW AND APPROVE (PRIOR TO
FILING) THE INCOME TAX RETURNS OF ANY PROPERTY OWNER TO WHICH CODE
SECTION 708(B)(1)(B) WILL APPLY ON ACCOUNT OF FIRST UNION'S PURCHASE OF AN
INTEREST IN SUCH PROPERTY OWNER, BUT SOLELY FOR PURPOSES OF CONFIRMING
COMPLIANCE WITH SECTION 12.7(E) ABOVE.
12.8
PRIOR DISTRIBUTIONS/PAYMENTS SCHEDULE.
AT THE TIME OF A
TRANSACTION THAT GIVES RISE TO CAPITAL PROCEEDS OTHER THAN FROM AFTER- ACQUIRED
PROPERTIES, THE MARC PRINCIPALS SHALL DELIVER TO FIRST UNION A SCHEDULE WHICH
SETS FORTH (I) THE MARC TOTAL CAPITAL AND THE FIRST UNION TOTAL CAPITAL, (II)