The challenge wasn’t the transactions themselves—it was the structure receiving them. Capital gains from the partner buyout were recognized in a single tax year, while the real estate sale triggered depreciation recapture and additional NIIT exposure. Entity design was outdated, basis planning had never been coordinated, and prior depreciation strategies were misapplied. Their CPA operated correctly within their silo, but failed to plan proactively.
Case study
From Forced Liquidity to Strategic Control
Company
Confidential Client (Multi-Entity Operating Business)
Industry
Plumbing & Real Estate Holdings
Challenge
Six-figure capital gains exposure triggered by a partnership buyout and real estate liquidation—with no coordinated tax strategy in place.
Impact
153k in Capital gains offset. 16k NIIT Eliminated
The client had done everything right—built a profitable operating business, accumulated valuable real estate, and negotiated a clean partner exit. But when a partnership buyout coincided with a real estate liquidation, the result was a forced liquidity event that compressed timing, accelerated capital gains, and exposed structural weaknesses that had gone unnoticed for years. Current CPA treated the tax bill as "unavoidable". The client knew it shouldn’t be.
The challenge
When Liquidity Becomes a Liability
The solution
Engineering the Structure Before the Tax Clock Expired
The engagement began with Trinity’s Tax Arcana Diagnostic™, where it became immediately clear that the exposure was not fully understood—even by the existing advisory team. There was no capital account tracking for the partnership, and the client’s CPA did not have an accurate cost basis history. As a result, the true gain from the buyout had never been quantified.
Before any strategy could be executed, Trinity rebuilt the foundation. We manually reconstructed eight years of K-1 activity, capital contributions, distributions, and allocations to calculate an accurate capital account and total embedded gain. Only once the full exposure was visible could intelligent decisions be made.
With clarity restored, Trinity engineered the execution. Entity structures were adjusted to properly receive liquidity, and alternative investment strategies were deployed to absorb and offset capital gains in a coordinated manner. Timing, tax character, and downstream impact were evaluated before each move—not after. What began as a forced liquidity event became a controlled outcome, driven by structure rather than reaction.
Results
For the first time, our tax outcomes matched our business decisions. We didn’t just reduce the bill—we finally understood what was happening.
A. Cardwell
Partner | Owner
150k+
Capital gains offset
100%
NIIT exposure eliminated
Permanent
Structural tax improvement implemented
