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Discussion:LLC Buyout

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Discussion Forum Index --> Accounting Questions --> LLC Buyout

Tncpa369 (talk|edits) said:

1 August 2013
LLC has 4 equal members. 3 members agree to sell their interest to the 4th member and his wife. The purchase agreement reads that Members 2,3,4 agree to sell and Member 1 & spouse agree to purchase all "interest of Sellers in and to Company, LLC including all accounts receivable, equipment and furnishings for the purchase price of $300,000 and assumption or satisfaction of all outstanding debt of Company, LLC." There is a new loan created in the name of the LLC and the old debt was paid off and checks were written to Members 2, 3, and 4 for $100,000.

I'm drawing a blank here on how to book this. Capital Accounts prior to this event was basically zero. I was thinking that this was going to be an outside purchase of interest, but now the LLC owes the bank.

Gplourde (talk|edits) said:

7 August 2013
Hey... so what was the usual process with equity transactions (i.e. net income)? Are you saying the business has no equity accounts altogether?

Tncpa369 (talk|edits) said:

8 August 2013
There was very little original contribution and their distributions thus far has pretty much matched their earnings.

Gplourde (talk|edits) said:

9 August 2013
Where did the 300,000 come from? Did the LLC float a loan and then buy them out or did Member 1 come up with 300,000 out of his own pocket to buy them out?

Tncpa369 (talk|edits) said:

20 August 2013
The LLC floated a new loan that payed off the old debt and the $300,000 to the old partners.

Kevinh5 (talk|edits) said:

20 August 2013
debt financed liquidation/technical termination? Does the LLC owned by the two remaining spouses constitute a partnership?

Trillium (talk|edits) said:

22 August 2013
bumping back onto forum index

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