Contract analysis

I. Purpose and Overview of This Memorandum This memorandum serves as the firm's internal preparation document for the pre-submission conference scheduled for Tuesday, July 22, 2025, at 10:00 a.m. Eastern Time, with the Internal Revenue Service, Office of the Associate Chief Counsel (International), CC:INTL Branch 1, at the IRS's principal offices located at 1111 Constitution Avenue NW, Washington, DC 20224. The purpo

II. Executive Summary of the Transaction A. The Taxpayer Solara Digital Infrastructure LP is a Delaware limited partnership, organized and established on March 17, 2014, under the Delaware Revised Uniform Limited Partnership Act. Its principal office is located at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801, and it maintains additional offices in New York, New York, and San Francisco, California. Solar

III. Proposed Agenda for the Conference The following is the proposed agenda for the pre-submission conference. Timing estimates are approximate, and the actual flow of the conference will depend on the IRS's questions and areas of interest. The total estimated conference time is approximately 110 minutes (one hour and fifty minutes).

1. Introductions and Administrative Matters (approximately 5 minutes) Leonard Cross will introduce the Calderwood & Harkness team. We will confirm the IRS personnel present, including any representatives from CC:INTL Branch 1 and CC:PSI. Administrative matters to be covered include: (a) the anticipated PLR submission date of August 15, 2025; (b) the IRS user fee of $38,000, which will be remitted by wire transfer upo

2. Overview of Taxpayer and Transaction (approximately 10 minutes) Leonard Cross will provide a brief overview of Solara's business, fund platform, and investor base, followed by a walk-through of the proposed five-step reorganization. This presentation will be supported by the pre-prepared organizational charts and step transaction diagrams that have been drafted as PLR Exhibits A (Pre-Reorganization Organizational

3. Ruling 1: IRC § 721(a) — Contribution of Portfolio Assets to the Master Fund (approximately 10 minutes) Present the argument that each of the four contributions (Steps 2 through 4) qualifies for tax-free treatment under § 721(a). Discuss carryover basis under § 723 and holding period tacking under § 1223(2). Address the mechanics of partnership-to-partnership contributions.

4. Ruling 2: IRC § 721(b) — Investment Company Exception (approximately 10 minutes) Present the argument that the Consolidated Master Fund LP does not constitute an "investment company" within the meaning of § 721(b) and Treas. Reg. § 1.351-1(c)(1)(ii). Discuss the operating company nature of the 23 portfolio companies and the absence of meaningful diversification.

5. Ruling 3: IRC § 367 — Inapplicability to Partnership-to-Partnership Transfers (approximately 15 minutes) This ruling request is expected to receive the most intensive scrutiny from the IRS. Present the argument that §§ 367(a) and 367(b) do not apply to the contributions described in Steps 2 through 4 because, by their express statutory terms, those provisions apply only to transfers to or from corporations. Discus

6. Ruling 4: IRC § 731(a) — Distribution Treatment (approximately 10 minutes) Present the argument that the distributions in Step 5 qualify as tax-free distributions under § 731(a)(1). Discuss the interaction with the § 752 liability analysis and the step transaction doctrine.

7. Ruling 5: IRC § 731(c) — Marketable Securities Exception (approximately 5 minutes) Present the argument that the distributed Master Fund LP interests are not "marketable securities" as defined in § 731(c)(2) and that the investment partnership exception is inapplicable.

8. Ruling 6: IRC § 752 — Liability Shifting (approximately 10 minutes) Present the netting analysis for the $1.34 billion in aggregate liabilities assumed by the Consolidated Master Fund. Discuss the application of the netting rule under Treas. Reg. § 1.752-1(f) and the tiered partnership rules under Treas. Reg. § 1.752-4.

9. Ruling 7: IRC § 704(c) — Built-In Gain Carryover and Remedial Allocation Method (approximately 10 minutes) Discuss the carryover of $1.72 billion in aggregate built-in gain under § 704(c), the continuation of the remedial allocation method under Treas. Reg. § 1.704-3(d), and the mechanics of tracking § 704(c) layers across tiered partnerships.

10. Ruling 8: IRC § 1446 — Withholding Analysis (approximately 5 minutes) Present the nonrecognition / no withholding argument for both the contributions and the distributions. Address the application of § 1446(f) to partnership interest transfers.

11. Ruling 9 (Entity Classification): Treas. Reg. § 301.7701-3 (approximately 5 minutes) Confirm the partnership classification for all three new entities (Consolidated Master Fund LP, International Feeder, and Tax-Exempt Feeder). This is expected to be a straightforward discussion.

12. IRS Feedback and Next Steps (approximately 15 minutes) Solicit preliminary reactions from the IRS regarding the ruling requests. Identify any areas where the IRS desires additional representations, factual detail, or supporting documentation beyond what is contemplated in the current draft PLR request. Discuss the anticipated timeline for PLR processing and any possibility of expedited handling given the December

IV. Detailed Talking Points and Anticipated IRS Questions — By Ruling This section sets forth our detailed substantive positions, supporting authorities, anticipated IRS questions and our proposed responses, and fallback positions for each of the ruling requests. These talking points are designed to equip the conference attendees with comprehensive preparation for the range of questions the IRS may raise during the p

Section 367(a) provides that, in the case of any exchange described in § 332, § 351, § 354, § 355, § 356, or § 361, if a United States person transfers property to a foreign corporation, such foreign corporation shall not be considered a corporation for purposes of determining the extent to which gain shall be recognized on such transfer. By its express terms, § 367(a) requires a transfer "to a foreign corporation."

Section 367(b) provides that, in the case of any exchange described in § 332, § 351, § 354, § 355, § 356, or § 361 in connection with which there is no transfer of property described in § 367(a)(1), an amount shall be included in the income of certain United States persons under regulations prescribed by the Secretary. Section 367(b) applies to exchanges involving "a foreign corporation." Here, neither the transferor

Section 731(c)(2) defines "marketable securities" as financial instruments (including stocks, bonds, notes, debentures, and partnership interests) that are "actively traded" within the meaning of § 1092(d)(1) — i.e., actively traded on an established securities market. The Consolidated Master Fund LP interests are not actively traded on any established securities market. They are privately held, illiquid limited part