| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
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| #7119 | Closed | public | Multifamily | Les Sparks |
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The Operating Agreement of the LLC provides for a 10% cumulative return on initial capital contributions. The Regulatory Agreement does not provide for these preferred returns. For equity purposes, are they just part of the surplus cash contribution? Does the accounting for the preferred return just need to be kept on an internal schedule and reported on tax return? |
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From Les Sparks: In general, Regulatory Agreements are usually silent on such items unless they are specifically for a HUD-imposed limitation. So, surplus cash is then calculated and the total amount is available to fulfill the requirements of the operating agreement. So, the accounting for these is kept off book in a separate schedule. Once surplus cash is available, it can be used to repay current and past earned distributions. However, we generally do not book these as they are only payable once surplus cash is available. |