Structuring Waterfall Provisions in LLC and Partnership Agreements
Navigating Complex Distribution Structures, Minimizing Negative Tax Consequences
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Tax Law
- event Date
Friday, December 20, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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This CLE/CPE course will guide corporate and tax counsel on the various methods of structuring waterfall distribution provisions in LLC and partnership agreements. The panel will examine a variety of economic and tax considerations such as timing and types of distributions (including tax distributions), approaches to drafting priority returns (internal rate of return vs. preferred return), carried interest/promote calculations, capital shifts, relationships between distribution and allocation provisions, and the interaction of IRS partnership audit rules and distribution waterfalls.
Mr. Greathouse focuses on corporate law, civil litigation, estate planning, and probate. He assists businesses, both for-profit and not-for-profit, with issues including structure, governance, financing, board management, benefits and employment, intellectual property, specialty tax incentives, representation before administrative bodies including the IRS and related civil litigation at the State and Federal level. Mr. Greathouse also counsels clients on planning and protecting their legacy through estate planning.
Mr. Mandarino's practice focuses on corporate, tax and finance law. He is involved with a wide variety of businesses and transactions, including experience with compliance, planning and M&A activities for partnerships, individuals and corporations. Mr. Mandarino’s practice also includes representation in tax controversy work. He writes and speaks extensively on a wide range of business, tax and finance topics.
In LLC and partnership agreements, waterfall provisions are heavily negotiated clauses that describe the priority of cash and assets to distribute among the entity's members and partners.
The distribution waterfall provisions are critical to ensuring that distributions conform with the substance of the deal among the partners. Structuring waterfall provisions requires an understanding of payment priorities, economic terms, tax implications, and the impact of the IRS partnership audit rules.
Counsel drafting and negotiating waterfall distribution provisions must ensure that the clauses are consistent with the economic arrangement of the parties. But, they must also ensure that the waterfall provisions are consistent with the partnership tax allocation agreement to avoid adverse tax consequences for the entity and its members or partners.
Listen as our authoritative panel discusses considerations and best practices for structuring waterfall provisions in LLC and partnership agreements, including the economic and tax impact of the clauses.
- Waterfall provisions, generally
- Determining/drafting waterfall provisions
- Understanding the economic arrangement of parties
- Tailoring accounting and tax provisions
- Implications of IRS partnership audit rules
The panel will review these and other key issues:
- What are the different types of waterfall provisions, and when should each be used?
- What are the key considerations and best practices for counsel drafting and negotiating waterfall provisions in LLC or partnership agreements?
- What are the pitfalls to avoid when tailoring partnership allocation provisions to waterfall provisions?
- What are the implications of IRS partnership audit rules for tiered waterfall distributions?
Learning Objectives
After completing this course, you will be able to:
- Identify the types of waterfall provisions and when to apply them
- Determine the implications of IRS partnership audit rules on waterfall allocations and distributions
- Establish methods of tailoring tax provisions to waterfall allocations and addressing initial capital accounts
- Identify the intricacies of priority returns in determining waterfall provisions
- Field of Study: Taxes
- Level of Knowledge: Intermediate
- Advance Preparation: None
- Teaching Method: Seminar/Lecture
- Delivery Method: Group-Internet (via computer)
- Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
- Prerequisite: Three years+ business or public firm experience at mid-level within the organization with supervisory authority over other preparers/accountants in preparing complex tax forms and schedules and preparing for partnership audits. Specific knowledge and understanding of partnership structures, operating agreements, allocations and distributions and IRS partnership audits.
Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.
Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
