Applying Waterfall Allocations: Calculating Standard and Complex Layered and Target Allocations

This webinar will provide flow-through practitioners with the tools necessary to interpret and allocate waterfall provisions in partnership operating agreements. This webinar will review standard allocation methods between partners and members and provide hands-on examples of the corresponding calculations of income and loss, distributions, liquidating distributions, and the maintenance of capital accounts by a partner based on these specifications.

Description

Waterfall allocations are complex. Yet, there is common language used in operating agreements that practitioners need to recognize. An agreement may be allocation-based, where income and loss are allocated based on explicit allocation rules and accounts are liquidated based on capital accounts, or distribution-based, where cash is distributed based on explicit rules and income or loss is allocated in accordance with expected distributions.

Allocations can be target or layered. Target allocations are made so that a partner's ending capital equals the target amount. Layered allocations compute each partner's share of profit and loss based on specific allocation rules. Distribution-based agreements with target allocations are now the norm for complex deals. Identifying specific types of agreements and allocations in partnership documents is not enough. Practitioners must interpret the language and be able to make the required allocations properly by partner. Nuances in operating agreements can dramatically alter the allocation, distribution, and liquidation requirements.

Listen as our panel of waterfall allocation experts walks you through interpreting and calculating waterfall allocations in partnership agreements.

Outline

  1. Waterfall provisions
  2. Types of agreements
    1. Allocation based
    2. Distribution based
    1. Layered allocations
    2. Target allocations

    Benefits

    The panel will cover these and other critical issues:

    Faculty


    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

    Mr. Browne advises clients on the U.S. income tax aspects of domestic and international business transactions and matters involving federal, state and foreign taxes. With more than 35 years of experience, he handles complicated tax and financing issues for a diverse range of clients. He has experience advising sellers and purchasers on tax aspects of business acquisitions involving both strategic and financial purchasers, preparing tax disclosures for debt and equity offering documents, advising clients on tax aspects of forming, funding, and reorganizing corporate and partnership entities, and advising clients on tax and financing aspects of international operations.


    Tanner Yeates
    Partner
    Holthouse Carlin & Van Trigt

    Mr. Yeates has over a decade of experience providing tax consulting, compliance and structuring services and. | Read More

    Mr. Yeates has over a decade of experience providing tax consulting, compliance and structuring services and specializes in serving clients structured as pass-through entities, primarily in the private equity and real estate industry sectors. He specializes in providing partnership tax consulting and compliance services. Mr. Yeates' experience includes addressing Hypothetical Liquidation at Book Value accounting, tax modeling, accounting for partnership basis adjustments, waterfall calculations, and other multi-tiered partnership tax issues. He has extensive experience performing financial modeling for complex transactions. Mr. Yeates focuses on the analysis of the tax efficiencies of proposed deal structures and conducts comprehensive tax due diligence.

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    Tax & Accounting Advisory Board

    Mishkin Santa, JD, LLM, TEP
    Principal, Director of International Tax
    The Wolf Group

    Michel R. Stein
    Principal
    Hochman Salkin Toscher Perez

    I purchased the conference a few minutes after it began and the customer service rep was very helpful and got me signed up and logged into the conference very quickly.

    Joanna Johnston
    Savas Greene & Company

    Excellent seminar! It was efficient and the important topics were covered at just the right pace; no time was wasted covering information that the participants already knew.

    Rhonda G. Williams, CPA
    Barraclough & Associates

    The conference was technical, informative and presented at a good pace.

    Krystal Ching
    KMH

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