SOF III - 1081 Southern Financial LLC l.704-1(bX2Xiv). Generally, tax allocations will follow book allocations. If the allocations made pursuant to the Onshore Feeder LP Agreement and other applicable agreements were successfully challenged by the IRS, the redetermination of the allocations to a particular Investor for U.S. federal income tax purposes could be less favorable than the allocations set forth in the applicable agreements. Adjusted Tax Basis for Investor Interest. For U.S. federal income tax purposes, an Investor's adjusted tax basis for its Interest generally will be equal to the amount of cash such Investor contributes plus the adjusted basis at the time of contribution of any property contributed (the "Capital Contribution") and will be increased by (a) any additional Capital Contributions made by such Investor and (b) such Investor's allocable share of (i) items of Onshore Feeder Fund taxable income and gain and (ii) nonrecourse indebtedness of the Onshore Feeder Fund (as defined for U.S. federal income tax purposes and allocated among the Investors in accordance with their profit sharing ratios). Such adjusted tax basis generally will be decreased, but not below zero, by such Investor's allocable share of (i) items of Onshore Feeder Fund taxable deduction, expense and loss and (ii) cash distributions by the Onshore Feeder Fund (including, in certain circumstances, distributions of certain "marketable securities") or constructive distributions resulting from a reduction in such Investor's share of nonrecourse indebtedness of the Onshore Feeder Fund. If the recognition of an Investor's distributive share of Master Fund losses would reduce its adjusted tax basis for its Interest below zero, the recognition of such losses by the Investor would be deferred until such time as the recognition of such losses would not reduce the Investor's tax basis below zero. Distributions. Cash distributions, including distributions of certain "