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Wyoming LLC Member Buyout

Buying out a Wyoming LLC member involves valuation, negotiation, payment, and operating agreement amendment. The operating agreement should specify the buyout method.

Answer

Buying out a Wyoming LLC member involves: (1) determining the buyout value (operating agreement formula, fair market value, book value, or independent appraisal), (2) negotiating payment terms (lump sum or installments), (3) signing a buyout agreement, (4) amending the operating agreement to remove the bought-out member, (5) updating capital accounts, (6) updating bank account signatories, (7) tax implications for both parties. Without operating agreement provisions, disputes are common; an upfront buyout formula prevents this.

By Zawwad, Founder & CEO, WyomingLLC by Topslice LLC.

Last updated May 20, 2026

Valuation methods

  • Operating agreement formula: pre-defined method (e.g., book value, multiple of revenue, multiple of profit)
  • Fair market value: independent appraisal of LLC then proportional share
  • Book value: capital account balance as recorded in LLC books
  • Negotiated: parties agree on value without formula

Payment terms

  • Lump sum (immediate)
  • Installments (over months or years, with interest)
  • Promissory note from LLC to seller (LLC pays over time)
  • Buy-down (smaller upfront payment plus future contingent payments based on performance)

Tax implications

  • Withdrawing member may recognize gain or loss (capital gain typically)
  • LLC may have basis adjustments (Section 754 election can step up basis)
  • Remaining members capital accounts adjusted
  • Consult a US CPA for both parties
  • Form 1065 final K-1 to withdrawing member shows the buyout

Frequently asked questions

Does Wyoming require a specific buyout method?
No. The operating agreement governs. Without provisions, Wyoming default rules apply (fair market value generally).
Can the LLC borrow money for the buyout?
Yes. LLC can take loans to fund member buyout, secured by LLC assets or cash flow.
Does WyomingLLC help with buyouts?
We refer to partner attorneys for complex buyouts. For simple buyouts, we can draft the operating agreement amendment.
What if we cannot agree on price?
Operating agreement should specify dispute resolution (arbitration, appraisal, mediation). Without it, parties may end up in court.

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