My question involves business law in the state of:
CT
Hi, guys.
Bit of a sticky issue here.
I m trying to determine my partner's equity percentage of an LLC.
I have spoken to attorneys but have gotten different answers.
So I need some help.
A number of years ago, another person and I decided to form an LLC. This LLC was formed for then current and any future business ventures with this person. (Person was a romantic partner also at that time - no we were not married as I'm told that makes a difference)
The LLC was formed under my name only.
No partnership agreement was done.
We purchased an investment property under this LLC.
Total investment was 38750. 5500 from partner, 12000 from me, and a loan from the former owners for 21250 which was recorded as a mortgage with monthly payments 30 year amortization 8 year balloon.
Even though partner was not listed on the LLC, taxes were done as a partnership, and profits and losses we're distributed via k1 on a 50/50 basis on taxes.
In actuality, the investment paid for itself 100 percent of the time, and upgrades ans repairs such as appliances were either paid for by income from the property or purchased by me. The partner did not contribute further.
Day to day operations such as maintenance or repairs were performed 80 percent by me.
Actual monthly profits were controlled and managed by me until November.
The profits paid our living expenses. Bills etc.
In November, the partner and I split. I started to give 50 percent of profits to the partner separately.
Partner had a huge fit that they were not on the LLC, so I filed an annual report that listed them.
Partner now wants to walk away and no longer have anything to do with the business.
Wants to sell the property and dissolve the LLC.
I do not want to sell.
So that leaves me one option. Buy them out.
But I need to determine thier stake in the property.
I have been told that regardless of their stake in the business, it's their contribution to the property that governs their percentage for sale/buyout purposes.
If that's the case, I'm not sure if it would be roughly 1/3, which would be thier 5500 compared to my 12000 initial investment.
OR
Since upon buyout I would be shouldering the baloon payment from the former owners, which was part of our initial investment, if their percentage would reflect their investment of 5500 compared to my 12000 + sole responsibility of payback of the 21250 which was lended. Which would equate to the partner having roughly a 14 percent stake.
OR
Does none of it matter, and partner gets 50 percent no matter what, regardless of their initial contribution?
I went to 3 attorneys and each one said something different. Which is how I was given these 3 different scenarios.
I'm open to each one, I just need guidance as to which one is accurate.
CT
Hi, guys.
Bit of a sticky issue here.
I m trying to determine my partner's equity percentage of an LLC.
I have spoken to attorneys but have gotten different answers.
So I need some help.
A number of years ago, another person and I decided to form an LLC. This LLC was formed for then current and any future business ventures with this person. (Person was a romantic partner also at that time - no we were not married as I'm told that makes a difference)
The LLC was formed under my name only.
No partnership agreement was done.
We purchased an investment property under this LLC.
Total investment was 38750. 5500 from partner, 12000 from me, and a loan from the former owners for 21250 which was recorded as a mortgage with monthly payments 30 year amortization 8 year balloon.
Even though partner was not listed on the LLC, taxes were done as a partnership, and profits and losses we're distributed via k1 on a 50/50 basis on taxes.
In actuality, the investment paid for itself 100 percent of the time, and upgrades ans repairs such as appliances were either paid for by income from the property or purchased by me. The partner did not contribute further.
Day to day operations such as maintenance or repairs were performed 80 percent by me.
Actual monthly profits were controlled and managed by me until November.
The profits paid our living expenses. Bills etc.
In November, the partner and I split. I started to give 50 percent of profits to the partner separately.
Partner had a huge fit that they were not on the LLC, so I filed an annual report that listed them.
Partner now wants to walk away and no longer have anything to do with the business.
Wants to sell the property and dissolve the LLC.
I do not want to sell.
So that leaves me one option. Buy them out.
But I need to determine thier stake in the property.
I have been told that regardless of their stake in the business, it's their contribution to the property that governs their percentage for sale/buyout purposes.
If that's the case, I'm not sure if it would be roughly 1/3, which would be thier 5500 compared to my 12000 initial investment.
OR
Since upon buyout I would be shouldering the baloon payment from the former owners, which was part of our initial investment, if their percentage would reflect their investment of 5500 compared to my 12000 + sole responsibility of payback of the 21250 which was lended. Which would equate to the partner having roughly a 14 percent stake.
OR
Does none of it matter, and partner gets 50 percent no matter what, regardless of their initial contribution?
I went to 3 attorneys and each one said something different. Which is how I was given these 3 different scenarios.
I'm open to each one, I just need guidance as to which one is accurate.
Business Disputes: Determining Partners Equity Percentage
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