Special Allocations and Limitations. The following provisions shall apply notwithstanding the provisions of Section 7.02. In the event that there is a conflict between any of the following provisions, the earlier listed provision shall govern. (a) For each taxable year of the Partnership, deductions and losses attributable to expenses relates to [utilities, real estate taxes, taxes and insurance and the property management fee] (but in no event depreciation or other cost recovery deductions) shall be specially allocated to the [Administrative][Managing] General Partner; (b) If there is a net decrease in Minimum Gain attributable to Nonrecourse Liabilities during any taxable year, each Partner who has a share of the Minimum Gain attributable to such Nonrecourse Liabilities (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)) shall be specially allocated items of Partnership income and gain for such year (and, if necessary, for succeeding years) equal to each Partner's share of the net decrease in Minimum Gain (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)(2)). Notwithstanding the preceding sentence, a Partner shall not be specially allocated items of Partnership income and Gain to the extent: (i) Such Partner's share of the net decrease in the Minimum Gain is caused by a guarantee, refinancing, or other change in the debt instrument causing it to become partially or wholly recourse debt or Partner Nonrecourse Debt, and such Partner bears the economic risk of loss (within the meaning of Treasury Regulation Section 1.752-2) for the newly guaranteed, refinanced, or otherwise changed liability; (ii) Such Partner contributes capital to the Partnership that is used to repay the Nonrecourse Liability, and such Partner's share of the net decrease in Minimum Gain results from the repayment; or (iii) If the Commissioner of the IRS waives or excepts such an allocation pursuant to Treasury Regulation Sections 1.704-2(f)(4) or (5). It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the minimum gain chargeback requirement of Treasury Regulation Section 1.704- 2(f), and this Section 7.03(b) shall be interpreted consistently therewith. (c) If there is a net decrease in Minimum Gain attributable to Partner Nonrecourse Debt during any taxable year, each Partner who has a share of the Minimum Gain attributable to such Partner Nonrecourse Debt (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)) shall be specially allocated items of Partnership income and Gain for such year (and, if necessary, for succeeding years) equal to such Partner's share of the net decrease in such Minimum Gain (as such share is determined pursuant to Treasury Regulation Section 1.704- 2(g)(2)). Notwithstanding the preceding sentence, a Partner shall not be specially allocated items of Partnership income and Gain to the extent: (i) The net decrease in such Minimum Gain arises because the liability ceases to be Partner Nonrecourse Debt due to a conversion, refinancing, or other change in the debt instrument that causes it to become partially or wholly a Nonrecourse Liability; or (ii) Treasury Regulation Section 1.704-2(i) otherwise so provides. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the minimum gain chargeback requirement of Treasury Regulation Section 1.704- 2(i) and this Section 7.03(c) shall be interpreted consistently therewith. (d) In the event a Partner unexpectedly receives in any taxable year any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6) that cause or increase an Adjusted Capital Account Deficit of such Partner, items of Partnership income and Gain shall be specially allocated to such Partner in such taxable year (and, if necessary, in succeeding taxable years) in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the qualified income offset provision of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and Section 7.03(c) shall be interpreted consistently therewith. (e) No Net Losses, Losses or Partnership deductions for any taxable year shall be allocated to the Limited Partner to the extent such allocation would cause or increase an Adjusted Capital Account Deficit with respect to such Partner, and such Net Losses, Losses or Partnership deductions shall instead be allocated to the General Partner. (f) If in any taxable year there is a net increase during such year in the amount of Minimum Gain attributable to a Partner Nonrecourse Debt, any Partner bearing the economic risk of loss with respect to such debt (within the meaning of Treasury Regulation Section 1.752-2) shall be specially allocated items of Partnership loss or deduction in an amount equal to the excess of (i) such Partner's share of the amount of such net increase, over (ii) the aggregate amount of any distributions during such year to such Partner of the proceeds of such debt that are allocable to such increase in Minimum Gain. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the required allocation of "partner nonrecourse deductions" pursuant to Treasury Regulation Section 1.704-2(i), and this Section 7.03(f) shall be interpreted consistently therewith. (g) The Managing General Partner's interest in each material item of Partnership income, gain, loss, deduction, and credit will be equal to at least forty-nine ten-thousandths of one percent (0.0049%) of each such item at all times during the existence of the Partnership and the Administrative General Partner's interest in each material item of Partnership income, gain, loss, deduction, and credit will be equal to at least fifty-one ten-thousandths of one percent (0.0051%) of each such item at all times during the existence of the Partnership. (h) The special allocations set forth in Sections 7.03(b), (c), (d) and (f) (the "Regulatory Allocations") are intended to comply with certain requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations shall be taken into account in allocating other profits, losses and other items of income, gain, loss and deduction to the Partners so that, to the extent possible, the net amount of such allocations of profits and losses and other items shall be equal to the amount that would have been allocated to each Partner had the Regulatory Allocation not occurred. In the event that in any year the Regulatory Allocations alter the allocations of tax items to the Partners, to the extent possible, depreciation deductions shall nevertheless be allocated ninety-nine and ninety-nine/one-hundredths percent (99.99%) to the Limited Partner, fifty-one ten- thousandths of one percent (0.0051%) to the Administrative General Partner and forty-nine ten- thousandths of one percent (0.0049%) to the Managing General Partner. (i) The respective interest of the Partners in the Net Profits, Net Losses, Gain, and Loss or items thereof shall remain as set forth above unless changed by amendment to this Agreement or by an assignment of a Partnership Interest authorized by the terms of this Agreement. Except as otherwise provided herein, for tax purposes, all items of income, gain, loss, deduction, or credit shall be allocated to the Partners in the same manner as are Net Profits from operations; provided, however, that with respect to property contributed to the Partnership by a Partner, such items shall be shared among the Partners so as to take into account the variation between the basis of such property and its fair market value at the time of contribution in accordance with Section 704(c) of the Code. (j) In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial fair market value (as used as book value of the property by the Partnership). In the event the book value of any Partnership property is adjusted upon: (i) acquisition of a Partnership interest by any Person in exchange for a capital contribution; or (ii) any non-pro rata distribution to Partners of Partnership property other than cash; subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its book value in the same manner as under Section 704(c) of the Code. Allocations pursuant to this Section
Appears in 1 contract
Sources: Limited Partnership Agreement
Special Allocations and Limitations. The following provisions shall apply notwithstanding the provisions of Section 7.027.3. In the event that there is a conflict between any of the following provisions, the earlier listed provision shall govern.
(a) For each taxable year of the Partnership, deductions and losses attributable to expenses relates to [utilities, real estate taxes, taxes and insurance and the property management fee] (but in no event depreciation or other cost recovery deductions) shall be specially allocated to the [Administrative][Managing] General Partner;
(b) If there is a net decrease in Minimum Gain attributable to Nonrecourse Liabilities or Partner Nonrecourse Debt during any taxable yearFiscal Year, each Partner who has a share of the Minimum Gain attributable to such Nonrecourse Liabilities or such Partner Nonrecourse Debt, as applicable, (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)) shall be specially allocated items of Partnership income and gain Gain for such year (and, if necessary, for succeeding years) equal to each Partner's ’s share of the net decrease in such Minimum Gain (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)(2)). Notwithstanding the preceding sentence, a Partner shall not be specially allocated items of Partnership income and Gain to the extent:
(i1) Such Partner's ’s share of the net decrease in the Minimum Gain attributable to Nonrecourse Liabilities is caused by a guarantee, refinancing, or other change in the debt instrument causing it to become partially or wholly recourse debt or Partner Nonrecourse Debt, and such Partner bears the economic risk of loss (within the meaning of Treasury Regulation Section 1.752-2) for the newly guaranteed, refinanced, or otherwise changed liability;
(ii2) Such Partner contributes capital to the Partnership that is used to repay the Nonrecourse Liability, Liability and such Partner's ’s share of the net decrease in Minimum Gain results from the repayment; or
(iii3) If the Commissioner Department of the IRS Treasury waives or excepts such an allocation pursuant to Treasury Regulation Sections 1.704-2(f)(4) or (5). It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the minimum gain chargeback requirement of Treasury Regulation Section 1.704- 1.704-2(f), and this Section 7.03(b7.4(a) shall be interpreted consistently therewith.
(cb) If there is a net decrease in Minimum Gain attributable to Partner Nonrecourse Debt during any taxable yearFiscal Year, each Partner who has a share of the Minimum Gain attributable to such Partner Nonrecourse Debt (as such share is determined pursuant to Treasury Regulation Section 1.704-2(g)) shall be specially allocated items of Partnership income and Gain for such year (and, if necessary, for succeeding years) equal to such Partner's ’s share of the net decrease in such Minimum Gain (as such share is determined pursuant to Treasury Regulation Section 1.704- 1.704-2(g)(2)). Notwithstanding the preceding sentence, a Partner shall not be specially allocated items of Partnership income and Gain to the extent:
(i1) The net decrease in such Minimum Gain arises because the liability ceases to be Partner Nonrecourse Debt due to a conversion, refinancing, or other change in the debt instrument that causes it to become partially or wholly a Nonrecourse Liability; or
(ii2) Treasury Regulation Section 1.704-2(i) otherwise so provides. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the minimum gain Minimum Gain chargeback requirement of Treasury Regulation Section 1.704- 1.704-2(i) and this Section 7.03(c7.4(b) shall be interpreted consistently therewith.
(dc) In the event a Partner unexpectedly receives in any taxable year Fiscal Year any adjustments, allocations or distributions described in Treasury Regulation Sections 1.704-Section 1.704- 1(b)(2)(ii)(d)(4), (5), or (6) that cause or increase an Adjusted Capital Account Deficit of such Partner, items of Partnership income and Gain shall be specially allocated to such Partner in such taxable year Fiscal Year (and, if necessary, in succeeding taxable yearsFiscal Years) in an amount and manner sufficient to eliminate, to the extent required by the Treasury Regulations, the Adjusted Capital Account Deficit of such Partner as quickly as possible. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the qualified income offset provision of Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and this Section 7.03(c7.4(c) shall be interpreted consistently therewith.
(ed) No Net Losses, Losses or Partnership deductions for any taxable year Fiscal Year shall be allocated to the Limited a Partner to the extent such allocation would cause or increase an Adjusted Capital Account Deficit with respect to such Partner, and such Net Losses, Losses or Partnership deductions shall instead be allocated to a Partner for whom such allocation will not cause an Adjusted Capital Account Deficit. In the event some but not all of the Partners would have Adjusted Capital Account Deficits due to an allocation of Losses, the limitation set forth in this Section 7.4(d) shall be applied on a Partner by Partner basis so as to allocate the maximum permissible losses to each Partner who is not a General Partner under Regulation Section 1.704-1(b)(2)(ii)(d). All Losses in excess of this limitation shall be allocated to the General Partner.
(fe) If in any taxable year Fiscal Year there is a net increase during such year in the amount of Minimum Gain attributable to a Partner Nonrecourse Debt, any Partner bearing the economic risk of loss with respect to such debt (within the meaning of Treasury Regulation Section 1.752-2) shall be specially allocated items of Partnership loss Loss or deduction in an amount equal to the excess of
of (i) such Partner's ’s share of the amount of such net increase, over (ii) the aggregate amount of any distributions during such year to such Partner of the proceeds of such debt that are allocable to such increase in Minimum Gain. It is the intent that items to be so allocated shall be determined and the allocations made in accordance with the required allocation of "“partner nonrecourse deductions" ” pursuant to Treasury Regulation Section 1.704-2(i), and this Section 7.03(f7.4(e) shall be interpreted consistently therewith.
(g) The Managing General Partner's interest in each material item of Partnership income, gain, loss, deduction, and credit will be equal to at least forty-nine ten-thousandths of one percent (0.0049%) of each such item at all times during the existence of the Partnership and the Administrative General Partner's interest in each material item of Partnership income, gain, loss, deduction, and credit will be equal to at least fifty-one ten-thousandths of one percent (0.0051%) of each such item at all times during the existence of the Partnership.
(hf) The special allocations set forth in Sections 7.03(bSection 7.4(a), (b), (c), (d) and (fe) (the "“Regulatory Allocations"”) are intended to comply with certain requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations shall be taken into account in allocating other profits, losses Losses and other items of income, gainGain, loss Loss and deduction to the Partners so that, to the extent possible, the net amount of such allocations of profits and losses Losses and other items shall be equal to the amount that would have been allocated to each Partner had the Regulatory Allocation not occurred. In the event that in any year the Regulatory Allocations alter the allocations of tax items to the Partners, to the extent possible, depreciation deductions shall nevertheless be allocated ninety-nine and ninety-nine/one-hundredths percent (99.99%) to the Limited Partner, fifty-one ten- thousandths of one percent (0.0051%) to Partner and the Administrative General Partner and forty-nine ten- thousandths of one percent (0.0049%) to the Managing General Partnerin accordance with their Percentage Interest.
(ig) The respective interest of the Partners in the Net Profits, Net Losses, Gain, and Loss or items thereof shall remain as set forth above unless changed by amendment to this Agreement or by an assignment of a Partnership Interest authorized by the terms of this Agreement. Except as otherwise provided herein, for tax purposes, all items of income, gainGain, lossLoss, deduction, or credit shall be allocated to the Partners in the same manner as are Net Profits from operations; provided, however, that with respect to property contributed to the Partnership by a Partner, such items shall be shared among the Partners so as to take into account the variation between the basis of such property and its fair market value at the time of contribution in accordance with Section 704(c) of the Code.
(jh) In accordance with Section 704(c) of the Code and the Treasury Regulations thereunder, income, gainGain, lossLoss, and deduction with respect to any property contributed to the capital of the Partnership shall, solely for tax purposes, be allocated among the Partners so as to take account of any variation between the adjusted basis of such property to the Partnership for federal income tax purposes and its initial fair market value (as used as book value of the property by the Partnership). In the event the book value of any Partnership property is adjusted upon: (i) acquisition of a Partnership interest by any Person in exchange for a capital contribution; or (ii) any non-pro rata distribution to Partners of Partnership property other than cash; , subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its book value in the same manner as under Section 704(c) of the Code. Allocations pursuant to this Section 7.4 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Partner’s Capital Account or share of Net Profits or Net Losses, other items, or distributions pursuant to any provision of this Agreement.
(i) For purposes of determining a Partner’s proportionate share of the “excess nonrecourse liabilities” of the Partnership within the meaning of Treasury Regulation Section 1.752-3(a)(3), the interest of each of the General Partner and the Limited Partner in Partnership profits and deductions shall equal its respective Percentage Interest. [Note: check with Tax Counsel if profits are intended to be allocated in a different percentage from losses.]
(j) If any Partner’s Capital Contribution is used to fund any syndication fees or expenses referred to in Section 709 of the Code, such Partner shall be specially allocated such fees or expenses. [Subject to Section 7.4(r) or (t)], If a deduction for any fee paid in accordance with this Agreement is denied by the IRS after a Final Determination on the basis that such fee was a distribution to a Partner by the Partnership, the Partner who received such fee shall be specially allocated an amount of gross income equal to the amount of the disallowed deduction.
(k) [Subject to Section 7.4(r) or (t)] – If the General Partner funds any Operating Deficit Advance, Development Fee Advance and/or Credit Adjuster Advance as other than a loan or capital contribution, in any year in which the Partnership repays all or a portion of any such Advance, the General Partner shall be specially allocated an item of gross income equal to the amount of such repayment, but not in excess of amounts previously allocated to the General Partner pursuant to Section 7.4(l) hereof.]
(l) [Subject to Section 7.4(r) or (t)] – If, for any year, the Limited Partner’s positive Capital Account balance at the close of such year plus applicable minimum gain allocable to the Limited Partner does not significantly exceed the aggregate deductions for depreciation projected to be allocable to the Limited Partner for all remaining years of the Compliance Period plus applicable minimum gain, then, for the remainder of such period, if so required by the Limited Partner, all items of income and deduction, other than depreciation, shall be specially allocated to the General Partner to the extent reasonably necessary for the Limited Partner to maintain a positive capital account.] [Include if Projections use special allocation of Losses to reduce Capital Account deficit issues--In addition, the General Partner shall be specially allocated the deduction of certain non-depreciation expenses paid or incurred by the Partnership to the General Partner or its Affiliates as set forth in the Projections.] [NOTE: Update to include specific expense line-items if possible and include other language as appropriate to conform to Projections, including replacing “Compliance Period” with “during which Credits will be allocated to the Limited Partner” if appropriate]
(m) Any increase or decrease in the amount of any item of income, Gain, Loss, deduction or credit attributable to an adjustment to the basis of Partnership assets made pursuant to Sections 734 or 743 of the Code, as a result of a valid election under Section 754 of the Code, and pursuant to corresponding provisions of applicable state and local income tax laws, shall be charged or credited, as the case may be, and any increase or decrease in the amount of any item of credit or tax preference attributable to any such adjustment shall be allocated to those Partners entitled thereto under such laws.
(n) Income, Gains, Losses, deductions and Credit (except as set forth below) allocated to a Partnership Interest assigned or reissued during a Fiscal Year of the Partnership shall be allocated to the Person who was the holder of such Interest during such Fiscal Year, in proportion to the number of days that each such holder was recognized as the owner of such Interest during such Fiscal Year or in any other manner permitted by the Code and selected by the General Partner in accordance with this Agreement, with the Consent of the Limited Partner, without regard to the results of Partnership operations during the period in which each such holder was recognized as the owner of such Interest during such Fiscal Year, and without regard to the date, amount or recipient of any distributions which may have been made with respect to such Interest[; provided that the Federal Historic Credit [Federal Energy Credit] and State Historic Credit shall be allocated to the applicable Partners in the Partnership as of placement of the Project in service [the Solar Facility PIS Date], pursuant to Section 47 [Section 48] of the Code and further provided that State Low-Income Credits shall be allocated between such transferor and transferee in accordance with the agreement of the parties]. With respect to any Federal Low-Income Credit claimed by the Partnership for the Fiscal Year of such assignment, the assignor and assignee may agree to allocate the distributive share of such Federal Low-Income Credit between the assignor and assignee either (a) in accordance with the ratio that the number of days in the Fiscal Year before and after such assignment bears to the total number of days in the Fiscal Year, or (b) in accordance with the ratio that the number of months in the Fiscal Year before and after such assignment bears to the total number of months in the Fiscal Year, provided that the month in which the assignment takes place shall be considered to be after the assignment if the assignment takes place in the first half of the month and before the assignment if the assignment takes place in the second half of the month. In the event the assignor and assignee do not agree on the method for allocating the distributive shares of the Federal Low-Income Credit, such Credit shall be allocated in accordance with the ratio that the number of days in the Fiscal Year before and after such assignment bears to the total number of days in the Fiscal Year. Also, for purposes of this Section, any change in the Percentage Interest of any Partner will also be treated as an assignment from that Partner whose Percentage Interest declined to that Partner whose Percentage Interest increased and to those Persons who became Partners and acquired a Percentage Interest.
(o) [Subject to Section 7.4(r) or (t)] -In the event that there is a determination that there is any original issue discount or imputed interest attributable to the Capital Contribution of any Partner or to any loan between a Partner or Affiliate and the Partnership, any income or deduction of the Partnership attributable to such imputed interest or original issue discount respecting such Capital Contribution or loan (whether stated or unstated) shall be allocated solely to such Partner. Any income recognized as a result of any receipt of grants, donations, subsidies, taxable Capital Contributions, if any, or discharge or forgiveness of indebtedness by the Partnership and/or (b) [in State Historic Credit or State Low-Income Tax Credit deals and if part of business deal – [delete in Historic Credit deals: income or] gain recognized by the Partnership as a direct or indirect result of (i) any receipt, distribution, sale or other transfer of State Historic Credit/State Low-Income Tax Credits/other transferable credits] shall be allocated 100% to the General Partner and the General Partner agrees to indemnify the Partnership and the Limited Partner for any tax liability and all costs, expenses and
(p) [Subject to Section 7.4(r) or (t)], In the event that the deduction of al
Appears in 1 contract
Sources: Limited Partnership Agreement