Alert

Structuring Waterfall Provisions in LLC and Partnership Agreements

Navigating Complex Distribution Structures, Minimizing Negative Tax Consequences

A live 90-minute premium CLE/CPE webinar with interactive Q&A


Thursday, April 23, 2020

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE/CPE webinar 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 performance), carried interest/promote calculations, capital shifts, relationships between distribution and allocation provisions, and the interaction of new IRS partnership audit rules and distribution waterfalls.

Description

In LLC and partnership agreements, the 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 new 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.

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Outline

  1. Waterfall provisions, generally
  2. Determining/drafting waterfall provisions
  3. Understanding the economic arrangement of parties
  4. Tailoring accounting and tax provisions
  5. Implications of new IRS partnership audit rules

Benefits

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 some pitfalls to avoid when tailoring partnership allocation provisions to waterfall provisions?
  • What are the implications of new IRS partnership audit rules for tiered waterfall distributions?

Faculty

Browne, James
James R. Browne

Partner
Barnes & Thornburg

Mr. Browne advises clients on the U.S. income tax aspects of domestic and international business transactions and...  |  Read More

Schwartz, Phyllis
Phyllis A. Schwartz

Partner
Schulte Roth & Zabel

Ms. Schwartz focuses her practice on the structuring, formation and operation of private equity funds, including buyout...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

48 hours after event

$347

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10 business days after event

CPE Not Available

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