(d) all allocations pursuant to the foregoing provisions of this section 5.4 (the 'regulatory allocations') shall be taken into account in computing allocations of other items under sections 5.2 and 5.3, including, if necessary, allocations in subsequent fiscal years, so that the net amounts reflected in the members' capital accounts and the character for income tax purposes of the taxable income recognized (e.g., as capital or ordinary) will, to the extent possible, be the same as if no regulatory allocations had been given effect.
article 6
allocation of taxable income and loss
6.1 in general.
(a) except as provided in section 6.2, each item of income, gain, loss and deduction of the company for federal income tax purposes shall be allocated among the members in the same manner as such item is allocated for capital account purposes under article 5.
(b) to the extent of any recapture income (as defined below) resulting from the sale or other taxable disposition of a company asset, the amount of any gain from such disposition allocated to (or recognized by) a member (or its successor in interest) for federal income tax purposes shall be deemed to consist of recapture income to the extent such member (or such member's predecessor in interest) has been allocated or has claimed any deduction directly or indirectly giving rise to the treatment of such gain as recapture income. for this purpose 'recapture income' shall mean any gain recognized by the company (but computed without regard to any adjustment required by sections 734 and 743 of the code) upon the disposition of any property or asset of the company that does not constitute capital gain for federal income tax purposes because such gain represents the recapture of deductions previously taken with respect to such property or assets.
6.2 allocation of section 704(c) items. the members recognize that with respect to property contributed to the company by a member and with respect to property revalued in accordance with treasury regulation (s) 1.704- 1(b)(2)(iv)(f), there will be a difference between the agreed values or 'carrying values' of such property at the time of contribution or revaluation and the adjusted tax basis of such property at that time. all items of tax depreciation, cost recovery, amortization, amount realized and gain or loss with respect to such assets shall be allocated among the members to take into account the book-tax disparities in accordance with the provisions of sections 704(b) and 704(c) of the code and the treasury regulations under those sections.