The Tax Battle Plan: What Fund Managers Really Need From Their CPA

Most fund managers assume their CPA is doing enough. The return gets filed, K-1s go out, and the box is checked.

But a return is history. It’s compliance. It’s not strategy.

What fund managers really need isn’t another form-filler, they need a Tax Battle Plan: a proactive roadmap designed to reduce liabilities, strengthen investor outcomes, and protect credibility.

At Stonehan, this is what we build every day. Because the difference between filing history and engineering outcomes is measured in millions.

What a Battle Plan Looks Like

A true tax battle plan isn’t just a checklist. It’s an integrated system that ties together entity structure, fund documents, depreciation, and state tax planning, all aligned under one cohesive strategy.

It’s proactive, not reactive. It’s the difference between waiting for April and winning before December.

1. Entity Chart Review

Every fund has multiple moving parts, GP, LPs, management company, and often side vehicles. If they aren’t structured correctly, you’re paying more tax than necessary.

Common traps we see:

• Schedule C entities bleeding self-employment tax. Management companies left unincorporated cost sponsors thousands each year.

• Misaligned GP/LP entities missing depreciation opportunities. When promote structures aren’t mirrored in your entity chart, allocations can’t flow correctly.

• Multiple entities without grouping elections. This traps losses in the wrong places, making deductions unusable when they’re needed most.

Stonehan’s tax strategists conduct detailed entity chart reviews to align every layer of your structure, from the management company to the fund level, ensuring your economics and tax positions work together, not against each other.

2. Fund Document Review

Attorneys draft operating agreements and PPMs to match economics. But if a CPA doesn’t review them, you risk a mismatch between legal intent and tax reality.

We often uncover:

• GP allocations that don’t flow correctly under Section 704(b).

• Missing minimum gain chargeback or qualified income offset clauses.

• Fund documents that fail to reflect real promote structures.

If the IRS ever audits your allocations, those missing provisions can undo years of planning.

A battle plan ensures your legal, economic, and tax frameworks are unified, a service Stonehan built its reputation on. Our team coordinates with attorneys to strengthen fund documentation and lock in compliance under Section 704(b) so every allocation can withstand scrutiny.

3. Depreciation Strategy

Bonus depreciation remains one of the most powerful tax tools available. When applied strategically, it can wipe out millions in taxable income in year one.

The key question is: who captures it?

• GPs can often capture outsized allocations of depreciation relative to their co-invest, if structured properly.

• LPs often can’t fully use depreciation due to passive loss limitations, leaving deductions unused.

• Properly drafted documents ensure depreciation is allocated in a way that benefits both sides, lowering the overall tax burden for the partnership.

At Stonehan, we don’t just process cost segregation studies, we design them around the fund’s promote structure. That’s how GPs maximize deductions that are both compliant and valuable.

4. State Tax Exposure

Federal taxes are only half the battle. For funds operating in multiple states, state tax exposure can blindside even experienced sponsors.

Common pain points:

• Nexus rules mean you may owe tax in multiple states, even if you’re domiciled elsewhere.

• Unreserved liabilities can trigger clawbacks or out-of-pocket GP hits after distributions are made.

• PTET elections can turn state tax into deductible business expense, bypassing the SALT cap and improving overall fund efficiency.

Stonehan’s multi-state and PTET planning division, outlined in our Exemplary Real Estate Tax Services framework, was built to solve exactly this. We integrate state compliance directly into the fund’s tax model, eliminating surprises and protecting credibility at disposition.

5. Quarterly Check-Ins

Deals don’t happen once a year. They happen every quarter, and every transaction carries tax consequences.

• Raising capital, refinancing debt, or planning exits all shift your fund’s tax position.

• Quarterly strategy sessions ensure you’re taking advantage of elections, adjustments, and opportunities as they arise, not six months too late.

That’s why our Tax Battle Plans include structured quarterly reviews. We track every change, test each assumption, and make sure the plan you built in January still holds by November.

6. Audit-Ready Documentation

Anyone can give advice. But when the IRS calls, talk isn’t proof.

A true tax battle plan includes:

• Case law and IRS code citations supporting each strategy.

• Detailed documentation for allocations, cost segregation, and PTET elections.

• Workpapers designed for transparency and defense.

Stonehan’s audit-ready approach means every line item is backed by evidence, not hope. We plan like your return will be reviewed, so it never becomes a problem.

The Cost of Not Having a Battle Plan

Without a tax battle plan, fund managers face predictable and costly traps:

• Missed elections that result in six-figure overpayments.

• Clawed-back distributions because state liabilities weren’t reserved.

• GP allocations lost due to weak fund documentation.

• Investor trust damaged when LPs realize opportunities were left on the table.

These aren’t minor oversights, they erode the very pillars of fund management: returns, relationships, and reputation.

Why Most CPAs Fail

Box-checker CPAs don’t know how to design fund structures. They don’t coordinate with attorneys. They don’t think like sponsors. They file history.

James has lived this from the inside out. As a former CFO of a real estate fund, he’s raised capital, operated properties, overseen billions in transactions, and navigated every GP/LP dynamic imaginable. That perspective changes everything.

Most accountants look backward.

Stonehan builds forward.

The Stonehan Difference

We don’t prepare history. We build Battle Plans for a successful future.

• Entity charts that eliminate inefficiency.

• Fund document reviews that align economics with tax law.

• GP depreciation strategies that maximize sponsor advantages.

• State tax planning that avoids credibility crises.

• Quarterly check-ins that keep execution on schedule.

• Audit-ready files that withstand IRS review.

This isn’t compliance. It’s proactive tax strategy designed to keep more money in the fund, and in your pocket.

Our approach draws directly from the principles outlined in Stonehan’s Exemplary Real Estate Tax Services framework: proactive planning, entity integration, and tax optimization for fund managers, developers, and syndicators nationwide.

Take Action Before Year-End

As we move through November, the window for implementing a 2025 strategy is closing fast.

By December, your ability to restructure entities, make elections, or allocate depreciation differently will be gone. The IRS doesn’t refund missed opportunities, and your investors won’t forget sloppy planning.

📆 Book your Tax Strategy Call with James before December 31 to:

• Build your personalized Tax Battle Plan

• Review your fund structure and entity chart

• Identify missed elections or grouping opportunities

• Protect your fund from costly state tax exposure

At Stonehan, we’ve structured billions in fund documents and designed hundreds of tax strategies that compound savings for fund managers like you.

📲 Schedule Your Tax Strategy Session Now →

This is your final window to engineer your advantage before the year resets.