Sole owner of a privately held waterfront marina with over 20 years in operation. The owner held the business through a combination of an operating business entity and personal ownership a structure that had developed organically as the business grew over the years.
After two decades of building the marina, the owner reached a turning point and needed liquidity capital for facility upgrades, personal financial goals, and long-overdue cash distributions from the business. Rather than taking on debt, he explored bringing in an outside investor. A qualified buyer came forward with a clean offer: $1,000,000 for a 25% stake in the marina. The valuation was strong, the terms were acceptable, and the owner was ready to move forward. The problem wasn't the deal. The problem was the tax bill that came with it.
Because ownership was split between a business entity and personal holdings, structuring the sale as a single transaction would have triggered an unfavorable tax result. Treating the full $1,000,000 as one event would have:
The result: an estimated tax liability of approximately $127,400 far more than it needed to be.
Our team conducted a full review of how ownership in the marina was legally structured across both the business entity and personal holdings. We identified that the $1,000,000 transaction could be separated into two distinct components:
By allocating the $1,000,000 across both layers of ownership rather than recording it as a single lump transaction, we kept each portion of the gain in a more favorable tax bracket, maximized available exclusions, and avoided the stacking effect that drives investors into higher rates.
The investor received his 25% stake. The deal closed on the same terms. Only the sourcing of the sale changed and that distinction made all the difference.
The owner closed the deal with his investor on exactly the terms he wanted $1,000,000 for a 25% stake and walked away with $44,000 more in his pocket. The restructure required no changes to the deal itself. It required only a careful look at how the transaction was sourced and recorded across the two ownership structures.
If you own a business across multiple structures an LLC, S-corp, or a mix of entity and personal ownership the way a transaction is sourced can dramatically affect your tax bill. Most owners don't realize they have options until after the deal closes. We review the full picture before any transaction is finalized, so you keep more of what you've built.