Target Allocation and Other Tax Considerations in Drafting LLC Operating Agreements

Jason D. Navarino, Partner | McCarter & English, LLP

Jason D. Navarino is a Partner at McCarter & English, LLP, based in the firm’s Newark office, where he serves as a dual-functioning corporate and tax attorney. He advises a broad range of clients, from closely held businesses to large corporations, with respect to structuring and negotiating domestic and cross-border mergers, acquisitions, and joint ventures, always with an eye towards tax-efficiency and achieving critical business objectives. In addition to his M&A and joint venture work, Jason regularly assists clients in forming operating and investment partnerships and limited liability companies, negotiating debt and equity investments and commercial contracts, navigating ownership and management transitions, and dealing with wind-downs and dissolutions. In connection with his corporate practice, he advises clients on a wide array of transactional tax issues, with a focus on federal and state income tax-related planning, structuring, and compliance. His practice spans across numerous industries, including technology, insurance, media, manufacturing, real estate, fintech, blockchain, and cannabis. Jason also counsels nonprofit and tax-exempt organizations with respect to their formation, ongoing compliance, and transactions.

• Education & Credentials

Jason earned his LLM in Taxation from New York University School of Law in 2013 and his JD from Yale Law School in 2007, where he served as Senior Editor of the Yale Law Journal. He received his AB summa cum laude from Princeton University, School of Public and International Affairs, in 2004. He is admitted to practice in New Jersey and New York, as well as before the U.S. District Court for the District of New Jersey. Following law school, Jason served as a Judicial Law Clerk to The Honorable Barry T. Albin of the Supreme Court of New Jersey from 2007 to 2008.

• Recognition & Leadership

Jason has been recognized in The Best Lawyers in America for Corporate Law in New Jersey (2026) and by Chambers USA for Tax Law in New Jersey (Band 1, 2022–2025) and Corporate/M&A (2023–2025). He was named an NJBIZ Leaders in Law Award Honoree in 2025 and was previously honored as an NJBIZ Forty Under 40 recipient in 2016. He was selected as a New Jersey Rising Star by Super Lawyers from 2014 through 2022 and was recognized by the New Jersey Law Journal as a New Leader of the Bar.

• Professional Involvement

Jason serves as a member of the Legal, Wealth, and Tax Advisory Committee of the Community Foundation of New Jersey and sits on the Board of Directors of LEO Impact Fund, Inc. Within the New Jersey State Bar Association, he serves as Chair of the Business Taxation Committee within the Business Law Section and as Chair of the International Taxation Committee within the Taxation Law Section, and he is a Past Chair of the Taxation Law Section. He is also a former member of the New Jersey Supreme Court Ad Hoc Committee on Attorney Malpractice Insurance.

• Experience

Jason’s experience centers on advising clients in their most complicated transactions, where he provides practical yet creative legal and tax advice. He structures and negotiates domestic and cross-border mergers, acquisitions, and joint ventures, balancing tax-efficiency with critical business objectives for clients ranging from closely held businesses to large corporations. He regularly assists clients in forming operating and investment partnerships and limited liability companies, negotiating debt and equity investments and commercial contracts, navigating ownership and management transitions, and dealing with wind-downs and dissolutions. His transactional tax work focuses on federal and state income tax-related planning, structuring, and compliance, and he advises across industries including technology, insurance, media, manufacturing, real estate, fintech, blockchain, and cannabis. Jason also counsels nonprofit and tax-exempt organizations on their formation, ongoing compliance, and transactions.

Len Nitti, CPA, MST Shareholder | Wilkin & Guttenplan, P.C.

Len Nitti is a Shareholder at Wilkin & Guttenplan, P.C., where he has been a member of the firm since 1999. Serving as Co-Practice Leader of the firm’s Real Estate Group, he advises a broad range of clients that includes closely held businesses, high-net-worth individuals, professional athletes, and real estate entities spanning affordable housing, qualified opportunity funds, green energy incentives, and urban real estate. His knowledge in federal and state taxation extends beyond compliance to encompass planning, research, and problem solving, with major areas of concentration in real estate, partnership, and state and local tax. He is also experienced in structuring complex transactions, coordinating voluntary disclosure agreements, developing exit strategies for real estate owners, and identifying tax savings opportunities and other financial incentives for clients.

• Education & Credentials

Len Nitti earned a Bachelor of Arts and a Master of Science in Taxation from Rutgers University. He holds a CPA license in New Jersey and continues his professional development through regular continuing professional education and educational seminars.

• Recognition & Leadership

Len serves as Vice President of the Monmouth-Ocean Development Council (MODC) and as Committee Chair for MODC’s Business Growth and Development Committee. He is also a member of the Supreme Court Committee on the Tax Court and serves on the Advisory Board of the Rutgers Center for Real Estate.

• Professional Involvement

Len is a member of the New Jersey Society of Certified Public Accountants (NJCPA) and its State Tax Resource Group, as well as the American Institute of Certified Public Accountants (AICPA). He additionally serves on the Advisory Committee of Middlesex County Vocational and Technical School.

• Experience

Len has been a frequent speaker on real estate, partnership, and state and local tax topics for CPAs, attorneys, and other professionals, presenting through both in-house sessions and seminars sponsored by external organizations. He has spoken extensively on qualified opportunity zone incentives and previously taught a seven-week course on Real Estate Accounting and Taxation at Monmouth University.

SESSION 1 – Entity Classification and Distribution Basics | 1:00pm – 1:20pm

This session covers entity classification, default rules and check-the-box elections, disregarded entities, and partnerships v. S corporations v. C corporations, then addresses distinguishing allocations and distributions, tax treatment of distributions, and drafting tax distributions.

SESSION 2 – Substantial Economic Effect Rules | 1:20pm – 1:40pm

Attorneys examine allocation methods, substantiality, capital account maintenance, achieving economic effect, and qualified income offsets under the substantial economic effect rules governing partnership allocations.

SESSION 3 – The Target Allocation Method | 1:40pm – 2:00pm

This session covers the explanation and examples of the target or forced allocation method, drafting options, addressing special allocations, deal terms, nonrecourse debt issues, and book v. tax allocations.

BREAK | 2:00pm – 2:10pm

SESSION 4 – Partner’s Interest, QBI Rules, and Transfers | 2:10pm – 2:40pm

Attorneys address partner’s interest in the partnership rules, qualified business income rules, drafting options for maximizing QBI deductions, and tax issues with respect to transfers including impact on allocations, sale v. retirement, PTP concerns, and basis adjustments.

SESSION 5 – Partnership Terminations and Other Tax Provisions | 2:40pm – 3:10pm

This session covers partnership terminations, withholding taxes, tax elections, tax reporting, partnership representative, profits interests explanation, comparison to capital interests, and drafting options.