Operating Agreement Split Calculator

LLC operating agreements specify distribution mechanics. This calculator runs the split.

Distributable cash

Member A capital

Member B capital

Member A share %

Pref hurdle %

Member A distribution

$1,500,000

Member B distribution

$1,000,000

Pref pool used

$800,000

How the math works

Pref pool = each member capital × pref rate. After pref, residual split at target %.

Match distribution mechanics to capital account allocations. The operating agreement is only as good as the bookkeeping behind it — capital accounts that haven't been maintained accurately invalidate even carefully-drafted distribution waterfalls, forcing expensive forensic cleanup at exit.

How to Use

Enter total distributable cash.
Enter Member A capital.
Enter Member B capital.
Enter Member A target share %.
Enter pref hurdle %.
Read distribution by member.

Frequently Asked Questions

Pro rata vs target?

Pro rata: members receive in proportion to capital (simplest). Target: members receive until target share reached (common in promote structures). Deficit restoration: members can be required to contribute to balance capital accounts.

Capital account mechanics?

Capital accounts track each member's contributions, distributions, and allocated income/loss. Distributions reduce capital accounts; contributions increase. Target allocations often flow through capital accounts first, then distributions follow.

Safe harbors?

IRS safe harbors (§704(b) regulations) govern substantial economic effect. Op agreements must respect capital accounts to avoid recharacterization. Non-compliant structures risk IRS recasting distributions as disguised income.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.