Contract analysis

I. Executive Summary Calderwood & Harkness LLP ("C&H") has been engaged to review the Schedule K-1 (Form 1065) issued by the fund administrator, Kendrick Thorne & Associates LLP ("Kendrick Thorne"), located at One Liberty Plaza, Suite 4100, New York, NY 10006, for Ironside Capital Management LP's ("Ironside") 99.99% limited partnership interest in ICM Cascadia Co-Invest, LP (the "Vehicle") for the tax year ended Dece

II. Background — Vehicle Formation and Activity During Tax Year 2022 A. Formation and Organizational Timeline The Vehicle was formed on July 22, 2022, when its Certificate of Limited Partnership was filed with the Delaware Secretary of State. Cascade Systems, located at 160 Greentree Drive, Suite 101, Dover, DE 19904, serves as the Vehicle's registered agent in Delaware. The LP Agreement was executed on July 29, 2022

III. Review of Schedule K-1 — Line-by-Line Analysis Set forth below is our line-by-line review of the Schedule K-1 (Form 1065) issued to Ironside by Kendrick Thorne for the 2022 tax year. A. Partner Information (Part I and Part II) Part I — Information About the Partnership. The K-1 identifies the partnership as ICM Cascadia Co-Invest, LP, Employer Identification Number 88-3921457, with an entity address of c/o Casca

Section 195 Treatment. To the extent that a portion of the $12,790,000 qualifies as start-up expenses under IRC Section 195, the deductibility of those expenses is governed by Section 195(b). Under that provision, a taxpayer may elect to deduct up to $5,000 of start-up expenses in the taxable year in which the active trade or business begins, with the $5,000 threshold reduced dollar-for-dollar by the amount by which

I. Capital Gains / Losses — Lines 8, 9a, 9b, 9c, 10, 11 No capital gains or losses are reported on the K-1 for the 2022 tax year. The Vehicle made no investments and disposed of no assets during the tax year. Lines 8 (net short-term capital gain or loss), 9a (net long-term capital gain or loss), 9b (collectibles gain or loss), 9c (unrecaptured Section 1250 gain), 10 (net Section 1231 gain or loss), and 11 (other inco

IV. Partner's Tax Basis Analysis A. Outside Basis Calculation Ironside's initial outside basis in its partnership interest in the Vehicle is equal to the cash contributed during the 2022 tax year: $22,497,750 (Ironside's 99.99% share of the $22,500,000 capital call). Ironside's outside basis is adjusted as follows for the 2022 tax year: Several observations are warranted: No risk of basis going below zero. Given the

V. UBTI Analysis A. General Framework The rules governing Unrelated Business Taxable Income ("UBTI") under IRC Sections 511 through 514 are relevant to the extent that any of Ironside's underlying investors include tax-exempt entities, such as pension funds, endowments, foundations, or other organizations described in IRC Section 501(c). Tax-exempt investors in Ironside would be subject to UBTI to the extent the inco

VI. State and Local Tax Filing Requirements A. Delaware ICM Cascadia Co-Invest, LP is organized as a Delaware limited partnership. Delaware does not impose an income tax on limited partnerships or their partners with respect to income earned by the partnership. However, the Vehicle is subject to the Delaware annual franchise tax for limited partnerships, which is $300 per year, due on June 1 of each year. Ironside, a

VII. Allocation Methodology and Special Allocation Provisions The LP Agreement provides for allocations of income, gain, loss, deduction, and credit in accordance with the partners' respective percentage interests (GP: 0.01%; Ironside as LP: 99.99%). These allocations are subject to the regulatory allocations required under Treasury Regulations Sections 1.704-1(b) and 1.704-2 to ensure the allocations have "substanti

VIII. Reconciliation Items and Open Questions for Kendrick Thorne & Associates LLP Based on our review of the K-1 and the matters discussed in this memorandum, we have identified the following items that should be confirmed or reconciled with Kendrick Thorne & Associates LLP. We recommend that Ironside's tax department transmit these questions to Kendrick Thorne promptly so that any necessary adjustments can be made

1. Organizational expenses ($285,000). Confirm whether the $285,000 of organizational expenses has been capitalized as a deferred asset or whether the Vehicle elected the Section 709(b) deduction/amortization. Confirm the "business commenced" determination underlying the treatment adopted.

2. Placement-agent fee ($1,050,000). Confirm that the $1,050,000 placement-agent fee paid to Rivermark Capital Markets Inc. has been capitalized as a syndication cost under IRC Section 709(a) and that no amortization or current deduction has been claimed.

3. Due-diligence costs ($12,790,000). Request a detailed schedule bifurcating the $12,790,000 of due-diligence costs and deposits into the following categories: (a) investigatory/start-up expenses under Section 195, (b) facilitative/acquisition costs under Treasury Regulations Section 1.263(a)-5, and (c) refundable deposits and prepaid assets. Confirm the tax treatment applied to each category.

4. R&W insurance premium deposit ($4,875,000). Confirm that the $4,875,000 R&W insurance premium deposit paid to Northgate Specialty Insurance Co. is treated as a prepaid asset on the Vehicle's balance sheet and is not included in any expense or deduction item on the K-1.

5. Working-capital reserve ($3,500,000). Confirm that the $3,500,000 working-capital reserve is reflected as cash on the Vehicle's balance sheet and is not treated as an expense.

6. Interest income on cash balances. Confirm the amount of interest income earned on the Vehicle's cash balances during the period from August 2022 through December 2022 and verify that it is properly reported on Line 5 of the K-1.

7. Ending capital account reconciliation. Provide the Vehicle's Schedules L, M-1, and M-2 and verify that Ironside's ending capital account as reported on the K-1 reconciles to the Vehicle's balance sheet and reconciliation schedules.

8. UBTI items. Confirm that no UBTI items are reported on Line 20 of the K-1.

9. New York filing status. Confirm whether a New York partnership return (Form IT-204) was filed for the Vehicle for the 2022 tax year. If not, advise whether a protective filing is recommended.

10. Capital account reporting method. Confirm that the tax-basis method was used for capital account reporting on the K-1, consistent with IRS requirements for tax years beginning in 2020 and later. We recommend that Ironside's tax department compile responses from Kendrick Thorne and transmit them to C&H for review prior to finalizing Ironside's own tax returns.

IX. Recommendations Based on the foregoing analysis, C&H offers the following recommendations:

1. Incorporate K-1 data into tax returns. Ironside's tax department should incorporate the K-1 data from the Vehicle into Ironside's federal and state income tax returns for the year ended December 31, 2022, subject to resolution of the open items identified in Section VIII above. The allocable share of the Vehicle's net ordinary loss, interest income, and nondeductible expenditures should be properly reflected on Ir

2. No additional state filings required for 2022. Based on our analysis, no state income tax filings appear necessary for the Vehicle or for Ironside with respect to the Vehicle in Oregon, Washington, Idaho, or Massachusetts for the 2022 tax year. The Vehicle's New York filing status should be confirmed with Kendrick Thorne as described in Recommendation 3 and Section VI.E above.

3. Follow up with Kendrick Thorne. Ironside should follow up with Kendrick Thorne on the open items identified in Section VIII of this memorandum, with particular emphasis on: (a) the characterization and tax treatment of organizational expenses ($285,000) and the "business commenced" determination; (b) the bifurcation and treatment of due-diligence costs ($12,790,000); and (c) the Vehicle's New York filing status. C

4. Ongoing monitoring — 2023 K-1. If the Vehicle remains dormant through the balance of 2023, as is currently expected absent reactivation of the transaction, the 2023 K-1 will primarily reflect ongoing administrative expenses. Based on our understanding of the Vehicle's operating cost structure, we estimate these expenses at approximately $185,000 per annum, consisting of fund administration fees, registered agent f

5. Treatment of capitalized costs upon reactivation or wind-down. If the Cascadia transaction is reactivated and the acquisition closes, the capitalized organizational expenses ($285,000) and start-up expenses (portion of $12,790,000 qualifying under Section 195) will become amortizable over 180 months beginning in the month the partnership commences business. Syndication costs ($1,050,000) will remain permanently ca

6. UBTI monitoring for tax-exempt investors. Ironside should continue monitoring the UBTI implications for its tax-exempt investor base. While no UBTI was generated in 2022, a future acquisition of Cascadia — particularly if funded through a leveraged structure — could generate significant UBTI exposure for tax-exempt partners. We recommend that Ironside evaluate whether blocker entity structures or other planning op

X. Conclusion The Schedule K-1 (Form 1065) issued to Ironside Capital Management LP by ICM Cascadia Co-Invest, LP for the tax year ended December 31, 2022, is generally consistent with expectations for a newly formed co-investment vehicle that called capital but did not consummate its intended investment during the tax year. The K-1 reflects no material income, no capital gains or losses, no distributions, and no UBT