Profits and Losses. Mean, for each Fiscal Year, an amount equal to the Company's Taxable income or loss for such Fiscal Year, determined in accordance with Code § 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code § 703(a)(1) shall be included in Taxable income or loss), with the following adjustments (without duplication): 4 1.27.1 Any income of the Company that is exempt from federal income Tax and not otherwise
... taken into account in computing Profits or Losses pursuant to this definition of "Profits" and "Losses" shall be added to such Taxable income or loss; 1.27.2 Any expenditures of the Company described in Code § 705(a)(2)(B) or treated as Code § 705(a)(2)(B) expenditures pursuant to Regulations § 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this definition of "Profits" and "Losses" shall be subtracted from such Taxable income or loss; 1.27.3 In the event the Gross Asset Value of any property is adjusted pursuant to the definition of Gross Asset Value, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the Gross Asset Value of the property) or an item of loss (if the adjustment decreases the Gross Asset Value of the item of property) from the disposition of such property and shall be taken into account for purposes of computing Profits or Losses; 1.27.4 Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income Tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted Tax basis of such property differs from its Gross Asset Value; 1.27.5 In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such Taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year, computed in accordance with the definition of Depreciation; 1.27.6 To the extent an adjustment to the adjusted Tax basis of any item of property pursuant to Code § 734(b) is required, pursuant to Regulations § 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Member's Membership Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the item of property) or loss (if the adjustment decreases such basis) from the disposition of such item of property and shall be taken into account for purposes of computing Profits or Losses; and 1.27.7 Notwithstanding any other provision of this Section 1.27, any items that are specially allocated pursuant to Section 5.1 shall not be taken into account in computing Profits or Losses.
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