Contract analysis

From: "Robert Jansen" To: "Helen Okamoto" Cc: "Leonard Cross" Subject: Re: Follow-Up — Outstanding Financial Data Items (Solara Digital Infrastructure LP — PLR Engagement)

I hope this message finds you well. I am writing to follow up on the data request letter we transmitted to your team on May 29 in connection with our engagement on behalf of Solara Digital Infrastructure LP (Engagement No. 20250527-SDILP-PLR). We appreciate the items that Caldwell Pierce has provided to date, but several categories of data from the original request remain outstanding, and I wanted to flag those speci

As background, Calderwood & Harkness has been retained by Solara Digital Infrastructure LP to prepare and submit a private letter ruling request to the IRS in connection with a cross-border fund-platform reorganization involving Solara's offshore fund vehicles. Our team is currently preparing a comprehensive tax analysis memorandum targeted for completion by June 16, 2025, which will serve as the analytical foundatio

I have set out below, in as much detail as possible, the specific outstanding items we need from Caldwell Pierce.

**1. Tax-Basis Balance Sheets for the Luxembourg SCSps**

We still need U.S. federal income tax-basis balance sheets for the following entities:

- Solara Digital Partners Fund IV-B (Luxembourg) SCSp (RCS B 248193; U.S. EIN 98-6241571) - Solara Digital Partners Fund V-B (Luxembourg) SCSp (RCS B 271056; U.S. EIN 98-7891267)

Ideally, we would receive these as of the most recent fiscal year-end and, if available, as of the most recent interim reporting date. These balance sheets are critical to several workstreams:

- **IRC § 721(a) Contribution Analysis.** We need to confirm the aggregate adjusted tax basis figures for property contributed by each Luxembourg vehicle to the Consolidated Master Fund. Our current working assumptions are approximately €782 million / $844.6 million for Fund IV-B Lux and approximately €1.14 billion / $1.23 billion for Fund V-B Lux (both at 1.08 EUR/USD), and we need to verify these against your recor

**2. U.S. Schedules K-1 (Form 1065) for All Partners — Most Recent Completed Tax Year**

We need complete sets of U.S. Schedules K-1 for all partners and members of the following four offshore fund vehicles for the most recently completed tax year:

- Solara Digital Partners Fund IV-A (Cayman) LP (EIN 98-6241503) - Solara Digital Partners Fund IV-B (Luxembourg) SCSp (EIN 98-6241571) - Solara Digital Partners Fund V-A (Cayman) LP (EIN 98-7891234) - Solara Digital Partners Fund V-B (Luxembourg) SCSp (EIN 98-7891267)

I should note that we received a partial set of K-1s for the Cayman vehicles, but we have not yet been able to confirm that the set is complete. In particular, we still need to locate K-1s for certain key limited partners, including Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group. If you could confirm completeness or provide any missing K-1s, that would be very helpful.

- Verify each partner's distributive share of income, deductions, and credits; - Model the § 752 partner-level liability allocations (recourse versus nonrecourse shares) on a pre-reorganization basis; - Confirm that § 704(c) built-in gain and loss layers are being tracked correctly at the partner level; and - Analyze § 1446 withholding obligations for non-U.S. partners in connection with the contemplated reorganizati

**3. IRC § 704(c) Gain/Loss Tracking Schedules**

We need the detailed § 704(c) book-tax difference tracking schedules (sometimes referred to as "reverse § 704(c) layers" or "BIG/BIL schedules") that Caldwell Pierce maintains for each of the four offshore vehicles listed above. For each contributed property, these schedules should reflect:

- The § 704(c) method elected (we understand the remedial allocation method under Treas. Reg. § 1.704-3(d) is used, but would appreciate confirmation); - The original contributed fair market value; - The adjusted tax basis at the time of contribution; and - The remaining § 704(c) gain or loss as of the most recent reporting period.

This request is particularly important with respect to the following key portfolio company interests, which represent the largest built-in gain positions:

| Portfolio Company | Approx. Built-In Gain | Primary Holding Vehicle | |---|---|---| | NovaBright Data Systems Inc. | $370M | Fund IV-A (Cayman) — 60% interest | | Crestline Cloud Solutions LLC | €145M / ~$156M | Fund IV-B (Luxembourg) — 100% interest | | Veridian Edge Computing Corp. | $340M | Fund V-A (Cayman) — 55% interest | | Thorngate Fiber Networks LP | $180M | Fund IV-A (Cayman) — 100% interest | | Helix Saa

Our current estimate of the total aggregate built-in gain across all four offshore vehicles is approximately $1.72 billion. We would like to verify this figure against Caldwell Pierce's records and resolve any discrepancies before the tax analysis memorandum is finalized.

**4. Portfolio-Level Liability Schedules**

We need a detailed breakdown of the portfolio-level indebtedness and liabilities of each offshore vehicle, including:

- The characterization of each liability as recourse or nonrecourse for purposes of IRC § 752; - Identification of which partners, if any, bear the economic risk of loss with respect to recourse liabilities; and - A description of any guarantees, indemnification arrangements, or other credit support arrangements that may affect the § 752 analysis.

We need to reconcile these schedules against the $1.34 billion aggregate liability figure reflected in the preliminary materials we have received. To be clear, this request relates to portfolio-level liabilities and is separate from the fund-level subscription credit facilities with Ashford National Bank ($1.1 billion for Fund IV; $1.5 billion for Fund V, with Sentinel Capital Markets acting as co-lender and administ

**5. EUR/USD Conversion Methodology Confirmation**

Finally, we would appreciate written confirmation from Caldwell Pierce regarding the EUR/USD exchange rate or conversion methodology used in preparing the U.S. federal income tax returns and K-1s for the two Luxembourg SCSps. As noted above, Calderwood & Harkness is using a uniform 1.08 EUR/USD rate throughout the PLR request, and we need to ensure consistency with your tax reporting. This affects the dollar-equivale

Given our June 16 target for the initial tax analysis memorandum, we would respectfully request delivery of all outstanding items by **Tuesday, June 17, 2025**, at the latest, though earlier receipt would be greatly appreciated and would give us additional working time. If any of the items described above will require more time to compile, I would ask that you flag those for us as soon as possible so that we can prio

I am happy to set up a brief call later this week to walk through the request list in more detail if that would be useful for you or your team.

**Coordination with Redstone Advisory Group**

I should also mention that Marco DeLuca at Redstone Advisory Group LLC is separately preparing fair market value appraisals of the portfolio company interests held by the four offshore vehicles. Once those appraisals are delivered, our team will need to reconcile them against Caldwell Pierce's tax-basis records as part of the FMV/tax basis reconciliation working paper. We may circle back with additional questions at

Stefan Dalmqvist (Solara's Head of Tax, copied here) can facilitate any internal Solara approvals that Caldwell Pierce may need in order to share the requested data with Calderwood & Harkness. Please do not hesitate to reach out to Stefan directly if there are any access or authorization issues.

Helen, we truly appreciate Caldwell Pierce's support on this engagement. The data items outlined above are foundational to our analysis, and timely receipt will help ensure that we stay on track for the downstream PLR submission, which is currently targeted for August 15, 2025. Please do not hesitate to contact me directly with any questions.

**Robert Jansen** Lead Associate, Tax Calderwood & Harkness LLP 1900 K Street NW, Suite 1100 Washington, DC 20006 Direct: (202) 555-4718 Email: rjansen@calderwoodharkness.com

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