hard · Private Equity pe-core
A fund uses a 'American' deal-by-deal waterfall with a 100% net-of-tax clawback. Deal A returns $150M on a $50M investment. The GP takes $20M in carry (assuming a 20% rate and no hurdle for simplicity). Deal B then loses the entire $50M investment.
If the GP's effective tax rate was 25%, what is the maximum clawback amount the LP can legally recover?
- $10.0M
- $20.0M
- $15.0M
- $7.5M
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