Math Behind Financial Aspects of Partnership Distribution Waterfalls

16 Pages Posted: 6 Nov 2014

Date Written: October 20, 2014

Abstract

This report reviews the basic financial concepts that apply to provisions commonly used in real estate partnership waterfall distributions. It discusses how those provisions are susceptible to other interpretations and often include superfluous and potentially confusing language. It concludes with specific recommendations for improving the definitional portion of distribution waterfalls.

Keywords: Partnership, profit allocation, distribution waterfall, time value of money, IRR, XIRR, net present value, future value, internal rate of return, hurdle rate

Suggested Citation

Borden, Bradley T., Math Behind Financial Aspects of Partnership Distribution Waterfalls (October 20, 2014). Tax Notes, Vol. 145, p. 305, 2014, Available at SSRN: https://ssrn.com/abstract=2519258

Bradley T. Borden (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

HOME PAGE: http://www.brooklaw.edu

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