(iv) If elected by the Partnership, upon the occurrence of any of the following events, the Capital Account balance of each Partner shall be adjusted to reflect the Partner's allocable share (as determined under sections 2.04 and 2.05) of the Net Profits or Net Losses that would be realized by the Partnership if it sold all of its property at its fair market value on the day of the adjustment: (A) Any increase in any new or existing Partner's interest in the Partnership resulting from the contribution of cash or property by such Partner to the Partnership; (B) Any reduction in a Partner's interest in the Partnership resulting from a distribution to such Partner in redemption of all or a portion of such Partner's interest in the Partnership; and (C) Whenever else allowed under applicable Treasury Regulations. (v) In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest. (vi) The foregoing provisions and other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulation §1.704-1(b) and §1.704-2, and shall be interpreted and applied in a manner consistent with such Regulation. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto, are computed in order to comply with such Regulation, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Partner upon dissolution of the Partnership. (vii) The Capital Account for each Partner shall be appropriately adjusted to reflect any change in Net Profit or Net Loss that may be required in connection with any administrative or judicial determination that is binding upon all of the Partners.
(b) "Carrying Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Carrying Value of any asset contributed (or deemed contributed) to thePartnership shall be such asset's gross fair market value at the time of such contribution; (ii) The Carrying Values of all Partnership assets shall be adjusted to equal their respective gross fair market values at the times specified in section 2.03(a)(iv) hereof if the Partnership has elected to adjust the Partners' Capital Accounts as provided in section 2.03(a)(iv); (iii) If the Carrying Value of an asset has been determined pursuant to clause (i) or (ii) of this subsection (b), such Carrying Value shall thereafter be adjusted in the same manner as would the asset's adjusted basis for federal income tax purposes except that depreciation deductions shall be computed in accordance with section 2.03(c)(i) hereof.
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- Spring '14
- Corporation, Limited partnership, Types of business entity, Taxation in the United States, partner