Contract analysis

I. BACKGROUND — FUND STRUCTURE AND PERFORMANCE ALLOCATIONS To provide the Service with the appropriate context for the analysis that follows, we briefly summarize the structure, governance, and relevant terms of ICM and its general partner. Fund Formation and Organization. Ironside Capital Management LP is a Delaware limited partnership formed on June 14, 2016, pursuant to a Certificate of Limited Partnership filed w

II. SUMMARY OF ISSUE UNDER EXAMINATION IDR #3 addresses the Service's inquiry into whether $38.7 million of the $94.3 million in total performance allocations made to Ironside Capital GP LLC for the 2021 tax year qualifies for long-term capital gain treatment under IRC § 1061. This $38.7 million represents the aggregate gains from fourteen (14) specific investment positions that were liquidated during the 2021 tax ye

Section 1061 of the Code, enacted as part of the Tax Cuts and Jobs Act of 2017 (Public Law No. 115-97), imposes a three-year holding period requirement — in lieu of the standard one-year holding period generally applicable under IRC § 1222 — for certain capital gains that are allocable to an "applicable partnership interest" ("API") to qualify for treatment as long-term capital gains. If the underlying assets generat

III. APPLICABLE LEGAL FRAMEWORK A. IRC § 1061 — Partnership Interests Held in Connection with the Performance of Services

Section 1061(a) of the Code provides the operative rule governing the tax treatment of net long-term capital gain with respect to an applicable partnership interest. Specifically, IRC § 1061(a) states: "If one or more applicable partnership interests are held by a taxpayer at any time during the taxable year, the excess (if any) of — (A) the taxpayer's net long-term capital gain with respect to such interests for suc

IV. METHODOLOGY FOR HOLDING PERIOD ANALYSIS Robert Jansen, an associate in the Tax Department of Calderwood & Harkness LLP, prepared the enclosed trade-level holding period analysis (Exhibit C) in connection with this response. The analysis was conducted using the following methodology, which is described here in detail to provide the Service with full transparency regarding the basis for ICM's position. Scope of Ana

V. ITEM-BY-ITEM RESPONSES TO IDR #3 Set forth below are ICM's responses to each of the twelve (12) items contained in IDR #3. Item 1. Request: Identification of all assets disposed of during the 2021 tax year for which gain was allocated to Ironside Capital GP LLC as a performance allocation (carried interest). Response: Enclosed as Exhibit A is a comprehensive schedule listing all assets disposed of by ICM during th

VI. NARRATIVE DISCUSSION — TRADE-LEVEL HOLDING PERIOD ANALYSIS A. Overview of the Fourteen Challenged Positions The fourteen (14) positions identified by the Service in IDR #3 span the breadth of ICM's multi-strategy investment approach. The challenged positions include investments across ICM's three principal strategy verticals: global macro positions (including sovereign debt instruments and currency-linked structu

1. Primary Source — Ridgeline Securities LLC. The trade-level data forming the foundation of the analysis was sourced directly from the prime brokerage records of Ridgeline Securities LLC. As ICM's prime broker and custodian, Ridgeline maintains a complete and independent record of all securities transactions executed on behalf of ICM, including trade dates, settlement dates, quantities, prices, and counterparty info

2. Cross-Reference — Greystone Fund Administration LLC. The trade data from Ridgeline was cross-referenced against the internal fund accounting records maintained by Greystone Fund Administration LLC, ICM's independent fund administrator. Greystone independently records all investment transactions for purposes of daily NAV calculations, investor reporting, and regulatory compliance. The cross-referencing process conf

3. Independent Verification — Borwick Craine & Associates LLP. As a final layer of verification, the holding period data was compared against the tax workpapers prepared by Borwick Craine & Associates LLP in connection with the preparation of ICM's 2021 Form 1065. Fenwick Craine independently obtained trade data from Ridgeline Securities LLC and Greystone Fund Administration LLC and performed its own holding period c

VII. EXHIBIT LIST The following exhibits are enclosed with this letter and form part of ICM's response to IDR #3:

VIII. RESERVATION OF RIGHTS ICM expressly reserves all rights in connection with this examination, including but not limited to the following: (a) ICM reserves the right to supplement this response at any time with additional documentation, data, analysis, or argument, whether in response to further requests from the Service or on its own initiative. (b) ICM reserves the right to raise additional legal and factual ar

IX. REQUEST FOR COMMUNICATION AND NEXT STEPS We respectfully request that Agent Albrecht, and any other members of the examination team, direct any questions or follow-up requests regarding this response and the enclosed materials to the undersigned or to Leila Nazari at Calderwood & Harkness LLP. Our contact information is as follows: Sylvia Hartwell Partner, Tax Department Calderwood & Harkness LLP 1251 Avenue of t