LSI 2010 Real Estate Joint Ventures conference materials.pdf

Brian Todd of Davis Wright Tremaine LLP
Andrew H. Zuccotti of K&L Gates LLP
“Depreciation” means, for each fiscal year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period for federal income tax
purposes; provided, that if the Carrying Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of any such
year or other period, Depreciation shall be an amount that bears the same
relationship to the Carrying Value of such asset as the depreciation,
amortization, or other cost recovery deduction computed for federal income
tax purposes with respect to such asset for the applicable period bears to the
adjusted tax basis of such asset at the beginning of such period, or if such
asset has a zero adjusted tax basis, Depreciation shall be an amount
determined under any reasonable method selected by the Managing Member.
Speaker 11: 15
Speaker 12: 15
“Mandatory Tax Distribution” means, with respect to a Member
for a fiscal year, a Distribution in cash in an amount equal to the product
of (a) the net amount of all taxable income, gain, loss and deduction of the
Company allocated to such Member with respect to such year pursuant to
Article 7, excluding (i) any income allocated to such Member pursuant to
Code Section 704(c) in accordance with Section 7.6 and (ii) any
depreciation or amortization deductions attributable to basis adjustments
under Code Section 743(b) for the benefit of such Member and (b) the
highest marginal Federal income tax rate applicable to individuals for such
fiscal year.
“Modified Adjusted Capital Account” means, with respect to any
Member, an amount equal to such Member’s Capital Account, increased
by the sum of such Member’s share of “partnership minimum gain,” as
defined in and determined under Regulation Sections 1.704-2(b)(2) and
1.704-2(d) and such Member’s share of “partner nonrecourse debt
minimum gain,” as defined and determined under Regulation Section
1.704-2(i).
“Target Capital Account” means an amount, determined with
respect to each Member for any fiscal year, equal to the hypothetical
Distribution such Member would receive if each Company asset (other
than cash) were sold for an amount of cash equal to such asset’s Carrying
Value as of the end of such fiscal year, each liability of the Company were
satisfied in cash in accordance with its terms (limited, with respect to each
Nonrecourse Liability, to the Carrying Value of the asset or assets
securing such Nonrecourse Liability), and all remaining cash of the
Company (including the net proceeds of such hypothetical transactions
and all cash otherwise available after the hypothetical satisfaction of all
Company liabilities) were distributed in full to the Members pursuant to
Section 7.8; provided that if upon such hypothetical liquidation instead of
receiving a Distribution such Member would be obligated to make a
capital contribution to the Company, such Member’s Target Capital
Account shall be a negative amount equal to such contribution obligation.
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Law Seminars International | Real Estate Joint Ventures and Funds | 02/08/10 in Seattle, WA