Legal Question in Business Law in Utah

4 partner's are in an LLC partnership each contributing equal shares, excluding 6% that was signed over to the mother of the four. The bulk of the LLC assets were two apart. four-plex's that have been sold.

Legally would each partner receive one fourth of the money from the sale, (excluding the 6%) Could two partner's commander $120,000 (36%) before dividing the money between the four partners?


Asked on 1/24/14, 2:32 pm

2 Answers from Attorneys
Randy Lish Randy M. Lish, Attorney at Law

Unless there is something in the Operating Agreement that changes the distribution, the proceeds from the liquidation of the LLC's assets should either continue to be held in the LLC for the benefit of all 4 partners (less the 6% belonging to Mom), or divided equally among the partners. If the two who have claimed all of the proceeds believe that it is compensation for their effort, they must claim it as earned income, and pay taxes accordingly (which I suspect they have not done). Otherwids, they can be held accountable for the theft of the LLC assets.

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Answered on 1/24/14, 2:36 pm
Alvin Lundgren Alvin R. Lundgren, L.C.

More likely than not a member of the LLC can demand an accounting - including specifics of how the income was divided. Generally members receive compensation according to the ratio of their ownership. From the proceeds of the sale, first are deducted LLC expenses. Then, if the remaining 94% was divided equally, each of the 4 would get the same percentage. Otherwise the operating agreement should set for the percent ownership.

If the two have dealt unfairly with the remaining two, they should be held accountable.

Call if you have more questions. 801-725-0980

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Answered on 1/24/14, 3:10 pm


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