Capital account clause: Copy, customize, and use instantly
Introduction
A capital account clause defines how capital is invested, maintained, and distributed among the parties in a partnership or limited liability company (LLC). This clause is essential for establishing the financial relationships between the parties, specifying how profits and losses will be allocated, and how withdrawals or distributions are handled. It helps ensure clarity on the ownership and financial contributions within the partnership or company.
Below are templates for capital account clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Capital account clause for partnership with equal contributions
This variation applies when all partners make equal contributions.
The capital accounts of the partners shall be maintained to reflect each partner's equal contribution to the partnership. All profits and losses shall be allocated equally among the partners, and any distributions will be made in accordance with the partners' equal share of the capital account, unless otherwise agreed.
Capital account clause for partnership with different contributions
This variation applies when partners make different contributions.
The capital accounts of the partners shall be maintained to reflect their respective contributions to the partnership. Profits and losses shall be allocated in proportion to each partner’s capital account, and any distributions will be made in accordance with the percentage of the total capital account that each partner holds.
Capital account clause for LLC with preferred return
This variation applies when members receive a preferred return before profit distribution.
The capital accounts of the LLC members shall be maintained, with each member’s capital account reflecting their initial contribution and any additional contributions made. Before any profits are distributed, [Party A] shall receive a preferred return of [insert percentage]% on their capital account, after which profits shall be distributed in accordance with the members' respective capital accounts.
Capital account clause for LLC with allocations of profits and losses
This variation applies when profits and losses are allocated based on capital accounts.
The capital accounts of the LLC members shall be maintained to reflect their capital contributions and any adjustments made. Profits and losses of the LLC shall be allocated to each member’s capital account in proportion to the percentage interest of each member as defined by their respective contributions, subject to any specific adjustments outlined in this Agreement.
Capital account clause for distributions upon liquidation
This variation applies when distributions are made during the liquidation of the entity.
In the event of liquidation, the capital accounts of the members shall be used to determine the order and amount of distributions. After the payment of liabilities, the remaining assets shall be distributed to the members in proportion to their respective capital accounts until each member has received an amount equal to their initial capital contribution, followed by a distribution of any remaining assets in accordance with their capital accounts.
Capital account clause for allocation of capital gains
This variation applies when capital gains are allocated based on capital accounts.
The capital accounts of the members shall reflect their respective ownership and contribution to the LLC. Any capital gains realized by the LLC shall be allocated to the members’ capital accounts in proportion to their respective shares of the LLC’s capital accounts, unless otherwise specified in this Agreement.
Capital account clause for changes in capital structure
This variation applies when changes in the capital structure occur.
The capital accounts of the members shall be adjusted to reflect any changes in the capital structure of the LLC. Any new contributions, withdrawals, or changes in the percentage of ownership interest shall result in a corresponding adjustment to each member’s capital account, ensuring that each member’s share of the LLC’s capital is accurately reflected.
Capital account clause for tax allocation
This variation applies when capital accounts are used for tax purposes.
The capital accounts of the members shall be maintained in accordance with the provisions of this Agreement and in compliance with applicable tax laws. Allocations of profits and losses for tax purposes shall be made based on the members' capital accounts, and any necessary adjustments shall be made to ensure the capital accounts reflect the members' respective tax obligations.
Capital account clause for member buyout or exit
This variation applies when a member exits the partnership or LLC.
In the event of a member’s exit, the exiting member’s capital account will be settled based on their capital contribution and the value of the LLC or partnership at the time of exit. The exiting member shall receive a distribution equal to the balance of their capital account, subject to any agreed-upon adjustments for liabilities, capital gains, or other factors as outlined in this Agreement.
Capital account clause for contributing assets other than cash
This variation applies when assets other than cash are contributed to the partnership or LLC.
If a member contributes property, assets, or services other than cash to the LLC, the value of the contribution shall be credited to the member’s capital account. The capital account shall reflect the fair market value of the contributed assets, subject to any necessary adjustments as determined by the members or appraisers appointed by the parties.
Capital account clause for debt allocation
This variation applies when debt is allocated between the members.
The capital accounts of the members shall be adjusted to reflect any liabilities or debts incurred by the LLC. Any debt obligations allocated to a specific member shall be deducted from their capital account, and the members will be responsible for fulfilling their respective obligations in accordance with the terms outlined in this Agreement.
Capital account clause for additional capital contributions
This variation applies when additional capital contributions are made.
The capital accounts of the members shall be updated to reflect any additional capital contributions made by the members. Each member's capital account will be credited with the amount of their contribution, and the allocation of profits and losses will be adjusted based on the new capital account balances.
Capital account clause for guaranteed payments
This variation applies when one member is guaranteed payments.
The capital accounts of the members shall be adjusted to reflect any guaranteed payments made to one or more members under the terms of this Agreement. Guaranteed payments will be recorded as a liability to the LLC and will not be allocated to the capital accounts of the members unless specifically stated in this Agreement.
Capital account clause for reconciliation of capital balances
This variation applies when capital account balances are periodically reconciled.
The capital accounts of the members shall be reconciled on an annual basis to ensure that they reflect the accurate capital contributions, distributions, and allocations of profits and losses. Any discrepancies will be addressed, and necessary adjustments will be made to ensure that the capital accounts are maintained in accordance with the terms of this Agreement.
Capital account clause for member contribution history
This variation applies when the history of member contributions is recorded.
The capital accounts of the members shall reflect the history of each member’s contributions, including cash, property, or other assets, as well as any distributions received. The capital account balances will be adjusted based on each member’s share of the profits and losses of the LLC or partnership.
Capital account clause for equal distribution of profits
This variation applies when profits are distributed equally.
The capital accounts of the members shall be maintained in accordance with each member’s respective contributions. Profits shall be distributed equally among all members, regardless of the percentage of ownership, unless otherwise specified in this Agreement. Any capital gains or income will be allocated to each member's capital account accordingly.
Capital account clause for special allocations
This variation applies when certain allocations are specified for a member.
The capital accounts of the members shall reflect the special allocation provisions outlined in this Agreement. [Party A] shall receive an allocation of profits and losses based on a predetermined percentage of their capital account, and any remaining profits or losses will be allocated to the other members in accordance with their respective capital accounts.
Capital account clause for negative capital account balance
This variation applies when a member has a negative capital account.
In the event a member’s capital account falls below zero, the member shall be obligated to restore their capital account to a positive balance. The negative balance will be carried forward and offset against future allocations of profits until the balance is fully recovered.
Capital account clause for contributions in kind
This variation applies when contributions are made in kind (non-cash assets).
If a member contributes property or assets in kind (e.g., real estate, intellectual property), the value of such contributions will be determined and credited to the member’s capital account based on an agreed-upon valuation. The capital account will reflect this contribution as though it were a cash contribution.
Capital account clause for withdrawal of capital
This variation applies when members are allowed to withdraw from their capital accounts.
The parties agree that [Party A] may withdraw a portion of their capital account balance, subject to the terms outlined in this Agreement. The withdrawal shall not exceed the available balance in [Party A]'s capital account after considering any liabilities or required distributions, and the remaining balance shall be adjusted accordingly.
Capital account clause for adjusting capital contributions
This variation applies when capital contributions are adjusted due to changes in the business.
The capital accounts of the members shall be adjusted if any changes are made to the capital structure of the LLC. If a member makes an additional contribution or if the business is valued at a different amount, the capital accounts will be updated to reflect the adjusted contributions or valuations.
Capital account clause for allocation of tax items
This variation applies when specific tax items are allocated based on capital accounts.
The capital accounts of the members shall reflect the allocation of tax items, including deductions, credits, and income. Each member’s share of these tax items will be allocated in proportion to their capital account balances, subject to any specific adjustments as required by tax law.
Capital account clause for calculating profit distributions
This variation applies when the method of calculating profit distributions is specified.
The parties agree that profits shall be distributed based on the capital accounts of the members, in proportion to their respective ownership interests. Profits shall be allocated to each member’s capital account at the end of each fiscal year, and distributions will be made accordingly, subject to the available balance.
Capital account clause for transfers of membership interest
This variation applies when a member transfers their membership interest.
In the event of a transfer of membership interest, the transferring member’s capital account will be adjusted to reflect the sale or transfer of their interest. The transferee will receive a capital account balance equal to the value of the transferred interest, subject to the approval of the other members.
Capital account clause for startup contributions
This variation applies when contributions are made at the startup of the company.
At the inception of the business, each member’s capital account will be credited with the initial contribution amount specified in this Agreement. The capital account will reflect the total value of the initial contributions, and all subsequent profits and losses will be allocated according to these initial contributions.
Capital account clause for debt allocation among members
This variation applies when debt is allocated to specific members.
The capital accounts of the members shall reflect their share of any debt obligations incurred by the LLC. Any debt attributable to a specific member shall be charged to that member’s capital account, and the member will be responsible for servicing the debt in accordance with the terms of the LLC’s financial arrangements.
Capital account clause for adjustments due to distributions
This variation applies when capital accounts are adjusted due to distributions made to members.
The capital accounts of the members will be adjusted to reflect any distributions made by the LLC. If a distribution is made, the capital accounts of the receiving members will be reduced by the amount of the distribution, and the remaining capital balances will be recalculated accordingly.
Capital account clause for liquidation of capital upon termination
This variation applies when capital accounts are liquidated upon termination of the business.
In the event of termination or dissolution of the LLC, the capital accounts of the members shall be liquidated. Each member shall receive a distribution equal to the balance of their capital account, after accounting for any debts, liabilities, and other obligations of the LLC.
Capital account clause for reinvestment of profits
This variation applies when profits are reinvested into the company.
The parties agree that any profits generated by the LLC will be reinvested into the business and added to the capital accounts of the members. These reinvested profits will be treated as additional contributions to each member’s capital account and will be allocated according to the ownership percentages.
Capital account clause for withdrawal restrictions
This variation applies when there are restrictions on withdrawing capital.
The parties agree that members may not withdraw any portion of their capital account balance until the expiration of [specified period] or unless agreed upon by all members in writing. Any attempt to withdraw capital before this period or without approval will be considered a breach of this Agreement.
Capital account clause for managing additional capital contributions
This variation applies when additional capital contributions are made by members.
If additional capital contributions are required to meet the financial needs of the LLC, the members will make additional contributions in proportion to their capital accounts. The capital accounts will be adjusted to reflect these additional contributions, and any necessary adjustments to profit and loss allocations will be made accordingly.
Capital account clause for adjustment due to reassignment of membership interest
This variation applies when a member’s interest in the LLC is reassigned.
If a member’s interest is reassigned to another party, the reassigned member’s capital account will be adjusted to reflect the value of the interest transferred. The new member’s capital account will be credited with an amount equal to the value of the transferred interest, and the members’ interests will be updated accordingly.
Capital account clause for multi-member LLC
This variation applies to a multi-member LLC with equal profit and loss allocation.
The capital accounts of the LLC members shall reflect their respective contributions, with all profits and losses allocated equally among the members. Any distributions will be made to each member in accordance with their respective capital account balance.
Capital account clause for deficit restoration obligation
This variation applies when a member is required to restore a deficit in their capital account.
In the event that any member’s capital account is reduced to a negative balance, that member agrees to restore the deficit to their capital account within [specified time]. The restoration amount shall be paid in cash or other acceptable form, as agreed upon by the members.
Capital account clause for profit-sharing based on capital
This variation applies when profits are shared based on capital contributions.
The parties agree that profits and losses of the LLC shall be allocated to each member’s capital account in proportion to their respective capital contributions. If any member makes an additional contribution during the term, their share of profits will be adjusted accordingly.
Capital account clause for equal liability contribution
This variation applies when all members share equal liability.
The capital accounts of the members shall reflect their equal contribution to the LLC. All liabilities and obligations incurred by the LLC shall be shared equally, with any distributions made in proportion to each member’s capital account balance.
Capital account clause for member buyout with capital adjustments
This variation applies when a member exits and their capital account is adjusted accordingly.
In the event of a buyout, the exiting member’s capital account shall be settled based on the fair market value of their ownership interest at the time of the buyout. The buyout amount will be deducted from the capital account, and the remaining members’ capital accounts will be adjusted to reflect the change in ownership.
Capital account clause for preferred return on contributions
This variation applies when members are entitled to a preferred return on their contributions before profit sharing.
The parties agree that [Party A] shall receive a preferred return of [specified percentage]% on their initial capital contribution. The preferred return shall be paid before any other distributions are made, and the remaining profits will be allocated based on the members' capital accounts.
Capital account clause for contributions of property
This variation applies when a member contributes property to the LLC.
The parties agree that [Party A] has contributed property valued at [amount] to the LLC. The value of this contribution will be credited to [Party A]’s capital account, and any future distributions will be based on the updated balance of their capital account.
Capital account clause for non-cash contributions
This variation applies when a member contributes non-cash assets to the LLC.
The parties agree that [Party A] has contributed non-cash assets, including [specific assets], to the LLC. The value of these assets will be appraised and credited to [Party A]’s capital account based on the fair market value at the time of contribution.
Capital account clause for profit-sharing based on capital balance
This variation applies when profit-sharing is based on each member's capital balance.
The parties agree that profits will be allocated to each member's capital account in proportion to their respective capital balances. Distributions will be made in accordance with the capital account balance at the end of each fiscal year, reflecting the member’s share of the LLC's profits.
Capital account clause for conversion of debt into capital
This variation applies when debt is converted into capital.
The parties agree that any debt obligations owed by the LLC to a member will be converted into capital contributions, which will be credited to the member’s capital account. The conversion will increase the member’s capital account and affect future profit and loss allocations accordingly.
Capital account clause for adjustment due to member withdrawals
This variation applies when a member withdraws capital from their account.
If a member withdraws funds from their capital account, the capital account balance will be adjusted accordingly. The withdrawal will be deducted from the member’s capital account, and future distributions will be based on the updated balance.
Capital account clause for calculating liquidation value
This variation applies when calculating the liquidation value of a member’s capital account.
In the event of liquidation, each member’s capital account will be used to determine the amount owed upon dissolution of the LLC. The capital account will reflect any outstanding obligations, including debts and liabilities, and the remaining balance will be distributed to the members based on their capital accounts.
Capital account clause for equal distribution upon liquidation
This variation applies when distributions are made equally upon liquidation.
Upon liquidation, the LLC will distribute its assets to the members in proportion to their respective capital account balances. Any remaining capital after payment of liabilities will be divided equally among the members.
Capital account clause for adjustment based on new capital contributions
This variation applies when additional capital contributions are made by members.
The capital accounts of the members will be adjusted to reflect any new capital contributions made during the term of this Agreement. The new contributions will be credited to the respective member’s capital account, and the profit-sharing ratios will be adjusted accordingly.
Capital account clause for redemption of capital contributions
This variation applies when capital contributions are redeemed.
The parties agree that [Party A] may redeem their capital contribution under the terms specified in this Agreement. The amount redeemed will be deducted from [Party A]’s capital account and paid according to the redemption schedule outlined herein.
Capital account clause for special allocations to specific members
This variation applies when special allocations are made to certain members.
The parties agree that [Party A] and [Party B] shall receive special allocations of profits in accordance with their capital accounts. The special allocation shall be made based on an agreed percentage of the profits for each member and will be adjusted annually.
Capital account clause for temporary capital contributions
This variation applies when capital contributions are temporary in nature.
The parties agree that [Party A] will make a temporary capital contribution to the LLC. This contribution will be credited to [Party A]’s capital account and will be returned after the specified period, with any accrued interest or returns paid to [Party A].
Capital account clause for profit distribution after debts are settled
This variation applies when profits are distributed only after debts are settled.
The parties agree that profits will only be distributed to the members after all debts and liabilities of the LLC have been paid. Once all outstanding obligations are settled, the remaining profits will be distributed based on the capital account balances of the members.
Capital account clause for contribution of intellectual property
This variation applies when intellectual property is contributed to the LLC.
The parties agree that [Party A] will contribute intellectual property valued at [specified amount] to the LLC. The intellectual property will be credited to [Party A]’s capital account based on an independent valuation, and any future distributions will reflect this capital account balance.
Capital account clause for partner’s initial contribution
This variation applies when the partnership is formed with an initial capital contribution from each partner.
The capital accounts of the partners shall reflect their initial contributions to the partnership. These contributions will be credited to each partner’s capital account, and any subsequent profits or losses will be allocated based on the percentage of ownership as reflected in each partner’s capital account.
Capital account clause for additional contributions based on needs
This variation applies when additional contributions are made based on the needs of the partnership or LLC.
The parties agree that, if additional capital is required to meet the operational or financial needs of the LLC, the members will make additional contributions in proportion to their existing capital accounts. The capital accounts will be adjusted to reflect these additional contributions.
Capital account clause for partner exit and final settlement
This variation applies when a partner exits the agreement and the capital account is used for settlement.
In the event of a partner’s exit from the LLC, the exiting member’s capital account will be settled in full. The exiting member will receive the balance of their capital account, subject to any adjustments for liabilities or distributions, as specified in this Agreement.
Capital account clause for performance-based capital contributions
This variation applies when capital contributions are based on performance.
The parties agree that the capital accounts will be adjusted based on the performance of each member’s duties. If any member achieves certain performance targets, their capital account will be credited with additional capital contributions as agreed by the members.
Capital account clause for contributions upon request
This variation applies when capital contributions are made upon request by the company.
The capital accounts of the members shall reflect any capital contributions made at the request of the LLC. The members agree to contribute additional capital upon request, and these contributions will be credited to the capital accounts as specified in the LLC’s financial needs.
Capital account clause for capital account deficit and contribution requirements
This variation applies when a member has a deficit in their capital account.
In the event that any member’s capital account becomes negative due to withdrawals or losses, that member agrees to contribute sufficient capital to restore their capital account to a positive balance. Failure to do so may result in the forfeiture of certain rights or interest in the LLC.
Capital account clause for distribution of profits after tax obligations
This variation applies when profits are distributed after taxes are accounted for.
The capital accounts of the members shall reflect their respective shares of profits and losses, after deducting the LLC’s tax liabilities. Any distributions will be made based on the remaining profits after tax obligations have been settled, and in proportion to each member’s capital account balance.
Capital account clause for debt financing and capital contributions
This variation applies when capital is raised through both equity and debt financing.
The capital accounts of the members shall be credited with both equity and debt contributions. Any debt financing raised by the LLC will be allocated to the members’ capital accounts in accordance with their equity contributions, and any returns on the debt will be distributed proportionally based on the capital accounts.
Capital account clause for partner loans
This variation applies when one partner loans money to the partnership.
If a partner loans funds to the LLC, the loan will be credited to that partner’s capital account. The loan amount will be treated as a debt owed by the LLC, and repayments will be made to the lender according to the terms specified in the loan agreement. Interest, if applicable, will be paid based on the agreement between the parties.
Capital account clause for capital accounts adjusted for liabilities
This variation applies when capital accounts are adjusted to account for liabilities.
The capital accounts of the members shall be adjusted to reflect any liabilities incurred by the LLC. If the LLC takes on any additional debts or liabilities, those amounts will be deducted from the capital accounts of the members in proportion to their ownership percentages, until all liabilities are settled.
Capital account clause for loss allocation
This variation applies when losses are allocated based on capital accounts.
The parties agree that losses will be allocated to the capital accounts of the members in proportion to their respective ownership interests in the LLC. In the event of a loss, each member’s capital account will be reduced by their share of the loss, and distributions will be adjusted accordingly.
Capital account clause for compensation as part of capital account
This variation applies when compensation is included in the capital account.
The parties agree that compensation paid to members for services rendered to the LLC will be credited to their capital accounts. The compensation will be treated as a capital contribution, and future distributions will be based on the adjusted capital account balances.
Capital account clause for tax-exempt member contributions
This variation applies when contributions are made by a tax-exempt member.
The capital accounts of the LLC members shall be credited to reflect any contributions made by tax-exempt members. These contributions will not be subject to the same tax treatment as contributions from taxable members, and the tax-exempt member’s capital account will be adjusted accordingly.
Capital account clause for transfer of interest and capital account adjustments
This variation applies when a member transfers their interest and their capital account is adjusted.
If a member transfers all or part of their interest in the LLC, their capital account will be adjusted to reflect the transfer. The transferee will assume the transferring member’s capital account balance, and the ownership interest will be updated accordingly.
Capital account clause for capital contributions tied to specific projects
This variation applies when capital contributions are made for specific projects.
The capital accounts of the members shall reflect their contributions to specific projects as agreed by the parties. The contributions made for a particular project will be tracked separately, and any profits or losses from that project will be allocated to the capital accounts of the contributing members.
Capital account clause for redemption of capital contributions
This variation applies when a member’s capital contribution is redeemed.
In the event of redemption, the capital accounts of the members shall be adjusted to reflect the redeemed amount. The member’s capital account balance will be reduced by the amount of the redemption, and any profits or losses related to that redeemed amount will be allocated accordingly.
Capital account clause for calculating additional contributions
This variation applies when additional contributions are required.
The parties agree that if additional capital is required to meet the financial needs of the LLC, each member shall contribute additional capital based on their pro-rata share of the capital accounts. The capital accounts will be updated to reflect these additional contributions, and the profit-sharing ratios will be adjusted as necessary.
Capital account clause for non-cash distributions
This variation applies when non-cash distributions are made.
The capital accounts of the members will reflect the value of non-cash distributions made by the LLC, including property, assets, or other non-liquid items. The value of such distributions will be determined based on the fair market value at the time of distribution, and the capital accounts will be adjusted accordingly.
Capital account clause for partner death or disability
This variation applies in the event of a partner’s death or disability.
In the event of a partner’s death or disability, their capital account will be settled in accordance with the terms outlined in this Agreement. The remaining partners will have the option to buy out the deceased or disabled partner’s interest, and the capital account will be adjusted to reflect the agreed-upon buyout amount.
Capital account clause for cross-collateralization of assets
This variation applies when assets are cross-collateralized between members.
The capital accounts of the members shall be adjusted to reflect any cross-collateralized assets. In the event that a member provides collateral for a loan or obligation on behalf of the LLC, their capital account will be credited with the value of the collateral, subject to any adjustments necessary to reflect the risk or liability associated with the collateral.
Capital account clause for member’s pro-rata share
This variation applies when a member’s capital account reflects their pro-rata share of profits and losses.
The capital accounts of the members shall be maintained in proportion to each member's capital contributions. Profits and losses shall be allocated to each member’s capital account based on their respective ownership interests in the LLC, ensuring an equitable allocation relative to their contributions.
Capital account clause for adjustments due to new financing
This variation applies when the capital account is adjusted due to new financing or loans.
The capital accounts of the members shall be adjusted to reflect any new financing or loans taken on by the LLC. Any new contributions or debts incurred will be allocated proportionally to the members’ capital accounts based on their respective ownership interests.
Capital account clause for contingent capital contributions
This variation applies when capital contributions are contingent on future events.
The parties agree that [Party A] shall make additional capital contributions to the LLC contingent upon the occurrence of [specified event]. These contributions will be credited to [Party A]’s capital account and will be allocated as necessary, based on the specific terms outlined in this Agreement.
Capital account clause for net capital adjustments
This variation applies when the net capital account is adjusted after specific actions.
The capital accounts of the members will be adjusted to reflect any changes in net capital. If any member’s capital account is increased or decreased due to transactions, distributions, or changes in liabilities, the capital account will be recalculated and updated accordingly.
Capital account clause for payments for services
This variation applies when members are compensated for services through capital account adjustments.
The parties agree that [Party A] will be compensated for services rendered to the LLC by an adjustment to their capital account. The value of the services provided will be credited to [Party A]’s capital account, and this adjustment will reflect in the next distribution of profits and losses.
Capital account clause for member’s contribution of intellectual property
This variation applies when a member contributes intellectual property.
The parties agree that [Party A] will contribute intellectual property to the LLC. The value of the intellectual property will be determined by mutual agreement and credited to [Party A]’s capital account. The capital account balance will reflect this non-cash contribution for the purposes of profit sharing and distributions.
Capital account clause for capital loss carryforward
This variation applies when capital losses are carried forward to subsequent periods.
The parties agree that any capital losses incurred by the LLC will be carried forward and allocated to the capital accounts of the members in proportion to their respective ownership interests. These losses will be used to offset future profits, and any adjustments will be made to the capital accounts accordingly.
Capital account clause for capital returns upon dissolution
This variation applies when capital is returned upon the dissolution of the LLC.
Upon the dissolution of the LLC, the capital accounts of the members will be used to determine the return of capital. Each member will receive a return of capital equal to the balance in their capital account, after the satisfaction of any liabilities, and any remaining assets will be distributed accordingly.
Capital account clause for adjustments due to withdrawal of a member
This variation applies when a member withdraws capital from their account.
If a member withdraws funds from their capital account, the amount withdrawn will be deducted from the member's capital account balance. Any remaining balance will be adjusted accordingly, and the member’s share of profits or losses will be recalculated based on the updated capital account balance.
Capital account clause for deferred capital contributions
This variation applies when capital contributions are deferred.
The parties agree that [Party A] will make a deferred capital contribution to the LLC. This contribution will be credited to [Party A]’s capital account at a later date, as specified in this Agreement. The deferred contribution will be included in the profit and loss allocation when credited to the capital account.
Capital account clause for adjusting capital contributions based on valuation
This variation applies when capital contributions are adjusted based on the valuation of the LLC.
The capital accounts of the members shall be adjusted to reflect the valuation of the LLC as determined by an independent appraiser. Any increase or decrease in the value of the LLC will result in corresponding adjustments to the capital accounts of the members, based on their proportionate ownership interests.
Capital account clause for refund of over-contributed capital
This variation applies when capital contributions exceed the agreed amount and are refunded.
If a member’s capital contribution exceeds the agreed-upon amount, the excess will be refunded by the LLC. The member’s capital account will be adjusted to reflect the amount refunded, and the profit-sharing ratios will be recalculated accordingly.
Capital account clause for capital account adjustments after profit distributions
This variation applies when capital accounts are adjusted following profit distributions.
After profit distributions are made, the capital accounts of the members will be adjusted to reflect the distribution amounts. The adjusted balances will be used for any subsequent allocations of profits and losses, and future distributions will be made based on these updated capital account balances.
Capital account clause for adjusting capital contributions for specific projects
This variation applies when capital contributions are made for a specific project.
The parties agree that [Party A] shall make a capital contribution solely for the purpose of funding [specific project]. The capital account of [Party A] will be adjusted to reflect the contribution for the project, and any profits or losses associated with the project will be allocated to [Party A]'s capital account accordingly.
Capital account clause for capital adjustments due to member death
This variation applies when a member passes away and their capital account is adjusted.
In the event of a member’s death, their capital account will be adjusted to reflect their share of profits and losses up to the date of death. The deceased member’s capital account balance will be distributed according to the terms of the member’s estate plan or as otherwise agreed by the remaining members.
Capital account clause for capital adjustments in the case of buyout
This variation applies when a member is bought out of the LLC.
If a member is bought out of the LLC, their capital account will be settled based on the fair value of their ownership interest at the time of buyout. The buyout price will be credited to the departing member’s capital account, and the remaining members' capital accounts will be adjusted to reflect the new ownership percentages.
Capital account clause for deferred distributions
This variation applies when distributions are deferred.
The parties agree that any distributions to members will be deferred until the capital accounts reach a specified balance. Once the required balance is met, the deferred distributions will be made to the members in accordance with their respective capital account balances.
Capital account clause for withdrawals upon certain conditions
This variation applies when withdrawals are permitted under certain conditions.
[Party A] may withdraw capital from their capital account only under the following conditions: [list of conditions]. Any withdrawal that exceeds the balance of [Party A]'s capital account will not be permitted, and the capital account will be adjusted accordingly to reflect any changes from approved withdrawals.
Capital account clause for allocation of losses
This variation applies when losses are allocated based on capital account balances.
The parties agree that any losses incurred by the LLC will be allocated to the capital accounts of the members in proportion to their respective ownership interests, as reflected in their capital accounts. The members will bear the losses in accordance with the agreed-upon allocation percentages.
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