c The terms Net Profits and Net Losses mean the taxable income or loss as the

C the terms net profits and net losses mean the

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(c) The terms "Net Profits" and "Net Losses" mean the taxable income or loss, as the case may be, for a period (or from a transaction) as determined in accordance with Code §703(a) (for this purpose, all items of income, gain, loss, or deduction required to be separately stated pursuant to Code §703(a)(1) shall be included in taxable income or loss)computed with the following adjustments: (i) Items of gain, loss, and deduction shall be computed based upon the Carrying Values of the Partnership's assets rather than upon the assets' adjusted bases for federal income tax purposes; (ii) Any tax-exempt income received by the Partnership shall be included as an item of gross income; (iii) The amount of any adjustments to the Carrying Values of any assets of the Partnership pursuant to Code §743 shall not be taken into account; and (iv) Any expenditure of the Partnership described in Code §705(a)(2)(B) (including any expenditures treated as being described in §705(a)(2)(B) pursuant to Treasury Regulations under Code §704(b)) shall be treated as a deductible expense. (d) "Partnership Minimum Gain" means an amount determined by computing, with respect to each nonrecourse liability of the Partnership (including its share of such liabilities of the Local Limited Partnership), the amount of gain (of whatever character), if any, that would be realized by the Partnership if it (or the Local Limited Partnership) disposed of (in a taxable transaction) the Partnership Property subject to such liability in full satisfaction thereof (and for no other consideration) and by then aggregating the amounts so computed. (e) "Excess Negative Balance" for a Partner means the excess, if any, of (i) the negative balance a Partner has in his Capital Account after reducing such balance by the
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net adjustments, allocations, and distributions described in Treasury Regulation §1.704-1(b)(2)(ii)(d)(4), (5), and (6) which, as of the end of the Partnership's taxable year are reasonably expected to be made to such Partner, over (ii) the sum of (A) the amount, if any, which the Partner is required to restore to the Partnership upon liquidation of his interest in the Partnership (or which is so treated pursuant to Treasury Regulations under Code §704(b)), (B) the Partner's share (as determined under Treasury Regulation §1.704-2(g)(1)) of the Partnership's Minimum Gain, (C) the Partner's deemed Capital Account restoration obligation pursuant to Treasury Regulation §1.704-2(i)(5), and (D) the Partner's share (as determined under Code §752 and Treasury Regulation §1.752-2) of any recourse indebtedness of the Partnership (not attributable to an otherwise nonrecourse loan to the Partnership for which that Partner is the Creditor) to the extent that such indebtedness could not be repaid out of the Partnership's assets if all of the Partnership's assets were sold at their respective Carrying Values as of the end of the fiscal year or other period and the proceeds from the sales were used to pay the Partnership's liabilities. For purposes of clause (C) above, the amounts computed pursuant to clause (A) above for each Partner shall be considered to be proceeds from the
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  • Spring '14
  • JamesE.Maule
  • Corporation, Limited partnership, Types of business entity, Taxation in the United States, partner

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