Secure Workflows: Protecting Data in Global Outsourced Operations
18 DECEMBER 2025
Client Overview
Our client is a prominent U.S.-based investment firm with a diversified global portfolio focused on real estate. Their holdings span across hotels, resorts, and residential properties, with significant assets in North America, Europe, and Asia. In addition to property ownership and development, the firm is an active investor in hospitality management platforms, operating through multiple legal entities and fund structures.
As a large-scale real estate investor and operator, the client routinely engages in complex transactions such as asset sales, partnership restructurings, and multi-state operations – all of which require expert handling of U.S. federal and state tax implications.
The Challenge: Managing Tax Compliance in a Complex Partnership Structure
With the firm’s operations spread across multiple jurisdictions and involving numerous partnership entities, the preparation and filing of tax returns presented several challenges:
Return Complexity & Technical Issues
- Complex Fund Structures: The client’s tiered ownership structure – comprising Lower Tier and Upper Tier entities – added multiple layers of reporting complexity.
- Asset Sales & Dispositions: Several real estate asset sales during the year required accurate reporting of gains, installment sale treatment, and proper documentation of capital events.
- Sale of Partnership Interests & Partner Transfers: Recording and reporting the tax implications of partner changes demanded meticulous attention to partnership basis adjustments and filing requirements.
- State Filing Nexus: Determining state-specific filing obligations based on income sourcing and economic nexus was essential to avoid penalties and ensure compliance.
- Tax Reform Impact: Understanding and applying new federal and state tax reforms, including the latest elections, depreciation rules, and limitations under the Tax Cuts and Jobs Act (TCJA), posed a moving target.
- Election Requirements: Several tax elections needed to be identified and made timely to optimize tax outcomes and ensure audit readiness.
Windy Street’s Approach & Solution
To address the client’s complex tax needs, Windy Street’s specialized tax team collaborated closely with their internal finance and legal departments. Our phased and methodical approach included:
1. Structural Analysis
Conducted a thorough review of the fund structure chart, mapping out all Lower Tier and Upper Tier entities.
Established an entity matrix to track ownership, income allocation, state nexus, and return filing obligations.
2. Technical Tax Treatment
Identified and applied the appropriate tax treatment for a variety of income streams (ordinary income, rental income, capital gains, etc.) and expense classifications.
Documented footnotes and disclosures for all material transactions, ensuring accuracy and completeness for audit or investor review.
3. State Compliance
Performed a state-by-state nexus analysis to determine required filings based on activity thresholds and income allocation.
Ensured timely preparation and submission of all required state and federal returns across multiple jurisdictions.
4. Installment Sales & Asset Dispositions
Analyzed installment sale arrangements to apply the correct recognition method over multiple tax periods.
Properly reported the sale and disposition of real estate assets, tracking basis, holding periods, and gain characterization.
5. Tax Elections & Reform Adjustments
Reviewed the client’s elections to ensure alignment with recent tax law changes and strategic planning objectives.
Recommended and prepared elections for depreciation methods, 754 adjustments, and other partnership-specific items.
Impact Delivered
- 100% on-time filing of all federal and state partnership returns
- Accurate reporting of complex transactions including sales, transfers, and elections
- Improved client visibility into tax obligations across jurisdictions
- Simplified compliance through entity mapping and tax workflow structuring
- Ongoing advisory on future asset sales, partnership changes, and tax-saving strategies
Conclusion
Through a strategic and detail-oriented approach, Windy Street successfully navigated the complex tax landscape for the client’s multi-tiered investment structure. By combining deep technical expertise with proactive planning, we delivered accurate, timely, and compliant tax filings, while also creating a scalable framework for future growth and transactions. Our partnership not only helped the client mitigate compliance risks but also empowered them with greater financial clarity and confidence as they continue expanding their global real estate portfolio.
Windy Street remains a trusted advisor, supporting the client in navigating ongoing tax reforms, optimizing filing strategies, and maintaining operational excellence across all levels of their organization.
