[GLWCPA]

I’m really confused on how profits are divided among members in an LLC. Becker states the following:

“As in a limted partnership, unless the articles or an operating agreement provides otherwise, profits and losses of an LLC are allocated on the basis of the members’ contributions in most states. Under the Uniform Limited Liability Company Act (ULLCA), profits are shared equally, regardless of capital contributions.”

So, are they shared equally or are they allocated on the basis of members’ contributions? The 2 sentences above seem to totally contradict each other unless I’m just reading to much into it. Also, the NINJA notes for REG state that “Members divide profits equally unless otherwise stated”, so this seems to be more in the line with the ULLCA, but not sure when the 1st scenario would take place?

[jomarie]

I asked the same question under the REG general discussions. What we discussed starts on page 17 and goes for a bit. Read that it'll help.

Started sitting in May 2002, on and off. But since 2008 I've been nonstop and my scores are....
AUD - 39, 48, 56, 65, 68, 73, 76!!! (Finally passed in Oct 2011!!!) Becker, NINJA, & Wiley
REG - 75 (Lost Credit) 72, 68, 73, 75 (Passed again in Aug 2011) Becker, NINJA, & Wiley
FAR - 65, 68, 75 (Lost Credit) 68, 73, 73, 80 (Passed again in May 2012) Roger, NINJA, & Wiley
BEC - 65, 68, 71, 72, 72, 71, 76 (Lost Credit)- 70, 76!!!! I AM DONE!!! - Roger, NINJA, & Wiley
After 10 long years of studying, I AM DONE!!!! Finally a Licensed CPA in the State of New York!!

[Anonymous]

Just searched through that thread and it is not on page 17.. Can someone re-answer this? I would think it is allocated to capital contributions because that is how it is done on all of the Becker MCQs.

[barelystayingsane]

I also could not find it. Providing a link might have been helpful, especially since there are multiple REG study group threads.

Regardless, @cbcruz85, it depends on the state in which the LLC is located. For those states that have adopted the ULLCA, profits are divided equally. For those states which have not adopted the ULLCA, profits are based on contributions. The question will specify if the state is a ULLCA state. If it does not say anything, I would go ahead and assume that profits should be allocated based on contributions.

[k1zuna]

per-share, per-day basis

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[k1zuna]

oops. just realized per share per day basis applies to S Corp… i'm ready to fail this exam

FAR - Passed
AUD - Passed
BEC - Passed
REG - 8/22/2013

[jckund]

Also LPs are allocated on a per share basis as well. Weird rule since LLP/GPs are not.

[Anonymous]

Barelystayingsane, Thanks!

[Author]

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