How should my real estate partners and I calculate each of our profits?

I am involved in a real estate deal with a partner. We are getting ready to sell the property and are in disagreement about how to calculate profit. This is the story: Partner 1 put 10% down and the mortgage is in his name Partner 2 put nothing down but paid everything 50/50 from the day of purchase (about 6 yrs ago) They agreed that original 10% down represented Partner 1 having 10% more interest in the property. This is documented in the co-tenancy agreement. They were both living in the house and put a co-tenancy agreement in place along with a quit claim deed to partner 2 for 45% interest in the house. About 2 years ago, they decided to rent the house rather than continue living there together. They started an LLC to protect personal assets and therefore did a quit claim deed (both of them deeding the property to the LLC). They also have an operating agreement for the LLC which denotes the 45/55 split in ownership as capital contributions. They now want to sell the property. In one scenario, it is a basic sell price minus debt divided by % of interest calculation: Today's Est. Selling Price 550,000 Est. Closing Costs (33,000) Mortgage pay off balance (270,000) Net Profit 247,000 Partner 1 (55%) 135,850 Partner 2 (45%) 111,150 In the second scenario, partner 1 wants to calculate appreciation (sell price - purchase price) with a 45/55 split and then look at equity (purchase price - debt still owed) in terms of $ contributed. Appreciation: Today's Est. Selling Price 550,000 Original Purchase Price 400,000 Est. Gain on Sale 150,000 Est. Closing Costs (33,000) Net Proceeds 117,000 Partner 1 55% Est. gain on sale 82,500 Partner 1 55% Est. closing costs (18,150) Partner 1 55% net proceeds 64,350 Partner 2 45% Est. gain on sale 67,500 Partner 2 45% Est closing costs (14,850) Partner 2 45% net proceeds 52,650 Equity: Partner 1 10% Down 40,000 Partner 1 Loan payments made 45,000 Partner 1 Equity 85,000 Partner 2 Loan payments made 45,000 Partner 2 Equity 45,000 Total Partner 1 net proceeds plus equity = 149,350 Total Partner 2 net proceeds plus equity = 97,650 So which way is the "right" way to calculate each partner's profit? The co-tenancy agreement indicates profit will be calculated the 1st way. The operating agreement is a a pretty stock template only denoting the 45/55 split in capital contributions as an exhibit. Is there any precedent for calculating profit the 2nd way?