Private Equity Carry Case Study: Distribution & Tax Coordination

A rules-based, tax-aware approach to reserve building, charitable giving, and multi-state planning.

ELLEN'S STORY

Ellen, a partner at a private-equity firm in Boston, held carry across several deals. Distributions arrived in bursts, then went quiet. She kept second-guessing: What if a big check lands in December—should I fund the DAF now or next year? What if I underpay estimates and get penalties? What if I over-reserve and miss capital calls? Which states will claim what, and how does NIIT factor in?

When she came to Sachetta, we installed a standing playbook: a distribution waterfall (reserves → safe-harbor estimates → DAF/giving → long-term goals), rolling projections that update when K-1s arrive, and coordinated state filings. Distributions became pre-allocated, tax season stopped being a fire drill, and giving followed a written cadence.
Private equity partner discussing a carry distribution plan with reserves, taxes, giving, and goals with her husband in the woods.

ELLEN'S PLAN

Sachetta brought clarity by structuring household income, timing giving, and aligning all the moving parts—coordinating decisions with Ellen and her husband so everything fit their shared goals and tax picture.

Distribution & reserve planning. We built a household waterfall that auto-routes each distribution:

(a) family reserve target (plus a capital-call buffer),
(b) household taxes/estimated payments, factoring in her husband’s withholding/bonuses,
(c) giving/DAF contributions aligned to their joint policy,
(d) investments toward shared long-term goals.

Tax coordination. We modeled likely carry outcomes across Ellen’s deals and her husband’s income, and implemented a household safe harbor estimated tax process with a documented K-1 true-up routine when actuals arrive. We coordinated multi-state filing for the couple and evaluated elections (e.g., pass-through entity tax) where appropriate.

Legacy & giving design. Ellen and her husband’s estate documents and beneficiary designations were refreshed. Charitable intent became a recurring, joint strategy—with a donor-advised fund funded in high-income years.

ACTIONS IN THE FIRST 90 DAYS

In the first 90 days, we turn sporadic carry into a household playbook—clarifying cash needs, pre-allocating each distribution, and setting tax, giving, and estate rhythms with Ellen and her husband.

  • Collect both spouses’ key documents (returns, K-1s, W-2s/paystubs, capital account details) and set a family reserve target plus a capital-call buffer.

  • Begin to implement a household distribution waterfall that pre-allocates each check: reserves → household estimated taxes/withholding → giving/DAF → long-term goals.

  • Put a safe-harbor estimated-tax plan in place at the household level and a simple true-up routine when K-1s arrive.

  • Coordinate tax planning for multi-state filings for the couple and refresh core estate items (wills/POAs/beneficiaries); fix titling where needed.

RESULTS

Ellen and her husband now have a durable framework and a team that stays with them. As life and deals evolve—new funds, shifting taxes, liquidity events, or family milestones—we keep the plan current, handle the coordination, and help them decide the next right step.

WHAT'S YOUR STORY?

If this story feels familiar, a coordinated plan would likely focus on similar priorities: 

  • A household funding system that pre-allocates each distribution.

  • A flexible tax plan (safe harbor, K-1 true-ups, multi-state coordination).

  • A liquidity buffer for capital calls and near-term cash needs.

  • An intentional giving cadence.
Woman reading in a hammock; ongoing coordination with CPA, advisor, and attorney.

 

 

 

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Behind every financial plan is a real life—full of deadlines, family goals, and important decisions. This story reflects the kinds of challenges our clients bring to us, and how we build calm, clear strategies in response. While this story is fictional, the strategies are true to life.

Disclaimer: Action plans and results are shown for illustrative purposes only, are not indicative of any specific Sachetta client, and will vary based on each client’s individual circumstances and objectives.

Last updated September 2, 2025.