Common use of Membership Changes Clause in Contracts

Membership Changes. If a member has not been a member during a full fiscal year of the company, or if the number of ownership shares held by a member changes during a fiscal year, the net profit or net loss for the year will be allocated to the members based on their pro rata shares, as defined in IRC § 1377(a). But if any member’s interest in the company is terminated during a fiscal year, the company may elect to treat the company as having two taxable years—one ending on the date the member’s interest is terminated and the other ending on the last day of the company’s fiscal year. In this case, the net profit or loss for each taxable year will be allocated only between those who were members during that taxable year. This election is available under IRC § 1377(a)(2) and requires the consent of the member whose interest is terminated as well as that of the company and other members.

Membership Changes. If a member has not been a member during a full fiscal year of the company, or if the number of ownership shares held by a member changes during a fiscal year, the net profit or net loss for the year will must be allocated to the members based on their pro rata shares, as defined in IRC § 1377(a). But if any member’s interest in the company is terminated during a fiscal year, the company may elect to treat the company as having two taxable years—one ending on the date the member’s interest is terminated and the other ending on the last day of the company’s fiscal year. In this case, the net profit or loss for each taxable year will be allocated only between those who were members during that taxable year. This election is available under IRC § 1377(a)(2) and requires the consent of the member whose interest is terminated as well as that of the company other members and other membersthe company.

Membership Changes. If a member has not been a member during a full fiscal year of the company, or if the number of ownership shares held by a member changes during a fiscal year, the net profit or net loss for the year will be allocated to the members based on their pro rata shares, as defined in IRC § 1377(a). But if any member’s interest in the company is terminated during a fiscal year, the company may elect to treat the company as having two taxable years—one ending on the date the member’s interest is terminated and the other ending on the last day of the company’s fiscal year. In this case, the net profit or loss for each taxable year will be allocated only between those who were members during that taxable year. This 12 Xxxxx Xxxxx Law- Not to be used without legal representation election is available under IRC § 1377(a)(2) and requires the consent of the member whose interest is terminated as well as that of the company and other members.