Common use of Allocation of Net Loss Clause in Contracts

Allocation of Net Loss. 4.1.1 For purposes of and prior to making allocations of Net Loss, Capital Accounts shall be determined as of the end of the Fiscal Year, after taking into account all adjustments and allocations pursuant to paragraphs 3.3, 4.1.3 and 4.9 hereof and all distributions during the Fiscal Year. 4.1.2 Subject to the next sentence and to paragraphs 4.1.3, 4.9 and 4.10 hereof, Net Loss shall be allocated only to the General Partner and the Class A Limited Partners and shall be allocated among such Partners pro rata in accordance with their respective Percentage Interests. Net Loss shall be allocated so as to comply with the "alternate test for economic effect" in Treasury Regulation Section 1.704-1(d) and in accordance with the requirements of the Internal Revenue Code regarding "qualified income offsets." (a) Depreciation and amortization deductions with respect to Partnership assets that secure indebtedness of the Partnership, where any Partner (or an affiliate of such Partner) (the "Lending Partner") is the lender or guarantor of the indebtedness ("Partner Indebtedness") shall be specially allocated to the Lending Partner to the extent required by Treasury Regulation Sections 1.704-2(i). (b) If a Lending Partner is specially allocated depreciation or amortization deductions corresponding to Partner Indebtedness pursuant to paragraph 4.1.3(a), items of income and gain shall be specially allocated to the Lending Partner in an amount equal to the decrease in the excess, if any, of the principal amount of such Partner Indebtedness over the aggregate adjusted tax basis of the Partnership assets securing such Partner Indebtedness, in the Fiscal Year (and, if necessary, subsequent Fiscal Years) in which such excess decreases or in which the assets are disposed of; provided, however, that the aggregate income and gain allocated to a Partner pursuant to this paragraph 4.1.3(b) shall not exceed the aggregate of the depreciation and amortization deductions allocated to the Partner pursuant to paragraph 4.1.3(a).