Common use of DEFERRED REVENUE Clause in Contracts

DEFERRED REVENUE. Dell shall be liable for any increase in the present value of Taxes arising as a result of the acceleration of advance payments defined in Treasury Regulations Section 1.451-8(a) (such advance payments, the “Advance Payments,” and the present value of such Taxes arising as a result of the acceleration of Advance Payments, the “Present Value of Accelerated Taxes”) if the Distribution causes VMware to have a Stub Period immediately following the Distribution of more than ninety-two (92) days. The Present Value of Accelerated Taxes shall be calculated in the following manner: (i) determining the amount of Advance Payments that would have been eligible to be deferred to the first full taxable year after the Stub Period immediately following the Distribution if such Stub Period were ninety-two (92) days or less that are recognized in the Stub Period immediately following the Distribution (the “Accelerated Amount”); (ii) multiplying the Accelerated Amount by an assumed tax rate equal to the highest then-current U.S. federal income tax rate applicable to a corporation tax rate plus 3.5% (the “Assumed Tax Rate”); and (iii) dividing the product of the Accelerated Amount and the Assumed Tax Rate by a discount rate equal to one (1) plus the short-term annual Applicable Federal Rate published by the IRS in effect for the date of the External Distribution. The increase in the Present Value of Accelerated Taxes shall be calculated by subtracting the Present Value of Accelerated Taxes as determined in the prior sentence from the product of the Accelerated Amount and the Assumed Tax Rate as determined in step (ii) in the prior sentence.