29-706. Limitation on distributions; wrongful distribution; treatment as income
(Rpld. 9/1/20)
A. A limited liability company shall not make a distribution to a member to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited liability company would exceed the fair value of the assets of the limited liability company, except that:
1. Liabilities to members and former members under sections 29-703 and 29-707 and liabilities for which the recourse of creditors is limited to specified property shall be excluded.
2. The fair value of property subject to a liability for which the recourse of creditors is limited to specified property shall be included in the assets of the limited liability company only to the extent that the fair value of the property exceeds that liability.
B. The limited liability company may base a determination that a distribution is not prohibited under subsection A of this section on either of the following:
1. Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances.
2. A fair valuation or other method that is reasonable in the circumstances.
C. The effect of a distribution under subsection A of this section is measured either as of the date the distribution is authorized if the payment occurs within one hundred twenty days after the date of authorization or as of the date the payment is made if it occurs more than one hundred twenty days after the date of authorization.
D. If a member receives a distribution with respect to his interest in a limited liability company in violation of this chapter or an operating agreement, he is liable to the limited liability company for a period of six years thereafter for the amount of the wrongful distribution.
E. Except as otherwise provided in the operating agreement or the trust instrument, a distribution to a member that is a charitable remainder trust as defined in section 664(d) of the internal revenue code is income for the purposes of title 14, chapter 7, article 4 to the extent that the value of the member's interest in the limited liability company after distribution is equal to or greater than its value at the date of contribution of the member's interest in the limited liability company to the charitable remainder trust. In this subsection, " internal revenue code" has the same meaning prescribed in section 43-105.
Copyright ©2024 LegalFix. All rights reserved. LegalFix is not a law firm, is not licensed to practice law, and does not provide legal advice, services, or representation. The information on this website is an overview of the legal plans you can purchase—or that may be provided by your employer as an employee benefit or by your credit union or other membership group as a membership benefit.
LegalFix provides its members with easy access to affordable legal services through a network of independent law firms. LegalFix, its corporate entity, and its officers, directors, employees, agents, and contractors do not provide legal advice, services, or representation—directly or indirectly.
The articles and information on the site are not legal advice and should not be relied upon—they are for information purposes only. You should become a LegalFix member to get legal services from one of our network law firms.
You should not disclose confidential or potentially incriminating information to LegalFix—you should only communicate such information to your network law firm.
The benefits and legal services described in the LegalFix legal plans are not always available in all states or with all plans. See the legal plan Benefit Overview and the more comprehensive legal plan contract during checkout for coverage details in your state.
Use of this website, the purchase of legal plans, and access to the LegalFix networks of law firms are subject to the LegalFix Terms of Service and Privacy Policy.