TELESEMINAR: Structuring Profits Interest in LLCs / Partnerships – A National Perspective
February 26, 2014
12:00 – 1:00 p.m.
1.00 MCLE hours
Profits interests in LLCs and partnerships are an effective mechanism for giving members, managers or employees a stake in the financial success of the company without ceding control or necessarily triggering immediate taxable gain. The recipient has an incentive to help grow the company and the LLC’s owners fund the incentive payments through future, additive revenue. But there are a wide variety of ways of structuring profits interests, each with subtle financial, tax and operational tradeoffs. Profits interests can be out of future “profit,” with all the definitional vagaries of that term, or can mimic capital interests, with appreciation rights. This program will provide you with a practical framework for understanding the types of profits interests and the tradeoffs of each in the context of an LLC and partnership.
- Understanding types of “profits interest” and alternatives in LLCs/partnerships
- Profits interests based on fixed percentages v. “fill up” allocations
- Payouts based on operating profits v. capital profits v. appreciation in the company
- State law status and rights of profits interest and governance/operating issues
- Federal income tax consequences of each type of profits interest
- Drafting issues related to allocations, distributions, vesting, and forfeiture
Lee Lyman, Carlton Fields, Georgia
Leon Andrew Immerman, Alston & Bird, LLP, Georgia