Contract analysis

I. Executive Summary This memorandum analyzes whether any withholding obligation arises under Section 1446(a) of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), in connection with the proposed five-step reorganization of the Solara Digital Infrastructure LP fund platform (the "Reorganization"), with particular focus on Steps 2 through 5 of the Reorganization. This memorandum also addresses the po

II. Background and Factual Summary A. The Solara Fund Platform — Current Structure Solara Digital Infrastructure LP ("Solara" or the "Sponsor") is a Delaware limited partnership formed on March 17, 2014, pursuant to the Delaware Revised Uniform Limited Partnership Act, 6 Del. C. §§ 17-101 et seq. Solara operates as a leading private equity manager focused on digital infrastructure and enterprise software-as-a-service

1. Fund IV LP — A Delaware limited partnership (EIN 85-2103748) with approximately $4.2 billion in committed capital, of which approximately 72% has been deployed as of March 31, 2025. Fund IV LP is the primary vehicle for U.S. taxable investors. Its general partner is Solara Digital Infrastructure GP LLC.

2. Fund IV-A (Cayman) LP — A Cayman Islands exempted limited partnership (EIN 98-6241503) with approximately $1.85 billion in committed capital. The general partner is Solara Offshore GP Ltd., a Cayman Islands exempted company. The registered office is Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111. Fund IV-A (Cayman) LP is registered with the Cayman Islands

3. Fund IV-B (Luxembourg) SCSp — A Luxembourg société en commandite spéciale (EIN 98-6241571) with approximately €1.15 billion in committed capital (approximately $1.24 billion at an exchange rate of 1.08 EUR/USD). The gérant is Solara Luxembourg Management S.à r.l. (Luxembourg Register of Commerce and Companies ("RCS") No. B 248194). The registered office is 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg. The SCSp

4. Fund V LP — A Delaware limited partnership (EIN 88-3467219) with approximately $5.6 billion in committed capital, of which approximately 38% has been deployed as of March 31, 2025. Fund V LP is the primary vehicle for U.S. taxable investors in the more recent vintage. Its general partner is Solara Digital Infrastructure GP LLC.

5. Fund V-A (Cayman) LP — A Cayman Islands exempted limited partnership (EIN 98-7891234) with approximately $2.45 billion in committed capital. The general partner is Solara Offshore GP Ltd. Fund V-A (Cayman) LP is registered with CIMA under registration number MF-89103. This vehicle serves non-U.S. investors and certain U.S. tax-exempt investors.

6. Fund V-B (Luxembourg) SCSp — A Luxembourg société en commandite spéciale (EIN 98-7891267) with approximately €1.38 billion in committed capital (approximately $1.49 billion at 1.08 EUR/USD). The gérant is Solara Luxembourg Management S.à r.l. The SCSp is registered with the Luxembourg RCS under number B 271056. This vehicle serves European institutional investors. Each of the four Legacy Offshore Vehicles — Fund I

III. Applicable Legal Framework — IRC § 1446 A. Overview of IRC § 1446(a)

Section 1446(a) of the Code provides that, if a partnership has effectively connected taxable income for any taxable year, and if any portion of such income is allocable under IRC § 704 to a partner who is a foreign person, the partnership shall pay a withholding tax under § 1446(a) on behalf of such foreign partner. The statute was enacted to ensure that the U.S. collects withholding tax on income earned by foreign

Section 1446(f) of the Code, added by Section 13501 of the TCJA (Pub. L. No. 115-97, 131 Stat. 2054 (2017)), imposes a withholding obligation on the transfer of a partnership interest by a foreign person to the extent that gain on the transfer would be treated as effectively connected income under IRC § 864(c)(8). Section 1446(f) is distinct from § 1446(a) in both scope and operation: • IRC § 1446(a) imposes withhold

Section 1446(f) was enacted in conjunction with IRC § 864(c)(8), which provides that gain or loss of a foreign person from the sale or exchange of a partnership interest is treated as effectively connected with the conduct of a trade or business within the United States to the extent such gain or loss does not exceed the foreign person's distributive share of the partnership's effectively connected gain or loss that

IV. Analysis of Steps 2–4: Contributions of Portfolio Assets to the Consolidated Master Fund LP A. Nonrecognition Treatment Under IRC § 721(a) As analyzed in detail in the companion memorandum addressing IRC § 721(a) (Calderwood & Harkness LLP Memorandum, "Analysis of IRC § 721(a) Nonrecognition Treatment for Contributions to the Consolidated Master Fund LP," dated June 16, 2025, Engagement No. 20250527-SDILP-PLR), e

Section 721(a) provides that "[n]o gain or loss shall be recognized to a partnership or to any of its partners in the case of a contribution of property to the partnership in exchange for an interest in the partnership." The companion memorandum concludes that each of the following contributions satisfies the requirements of § 721(a): (a) The contribution by Fund IV-A (Cayman) LP of its portfolio assets (FMV $2.31 bi

Section 721(b) of the Code provides an exception to the general nonrecognition rule of § 721(a) for contributions to a partnership that would be treated as an "investment company" (within the meaning of IRC § 351) if the partnership were incorporated. Under § 721(b), if the transfer results in a "diversification" of the transferors' interests, gain is recognized to the contributing partner as if the contribution were

Section 1446(f) applies specifically to the transfer of a partnership interest by a foreign person. In the context of Steps 2–4, the Legacy Offshore Vehicles are transferring portfolio company interests — not partnership interests — to the Consolidated Master Fund LP. Accordingly, § 1446(f) is not directly implicated by the contributions. However, there is a discrete issue arising from the fact that at least one of t

V. Analysis of Step 5: Distributions by Legacy Offshore Vehicles and LP Migration A. Nonrecognition Treatment Under IRC § 731(a) As analyzed in detail in the companion memorandum addressing IRC § 731(a) (Calderwood & Harkness LLP Memorandum, "Analysis of IRC § 731(a) Nonrecognition Treatment for Distributions in Liquidation of Legacy Offshore Vehicles," dated June 16, 2025, Engagement No. 20250527-SDILP-PLR), the dis

Section 731(a)(1) provides that, in the case of a distribution by a partnership to a partner, gain shall not be recognized to such partner except to the extent that any money distributed exceeds the adjusted basis of such partner's interest in the partnership immediately before the distribution. In Step 5, the Legacy Offshore Vehicles distribute partnership interests in the Consolidated Master Fund LP — not money or

Section 1446(f) imposes a withholding obligation when a "transferee" acquires a partnership interest from a foreign "transferor." In the context of a partnership distribution, the distributing partnership is distributing its own property (its interest in the Consolidated Master Fund LP) to its partners. The distributing partnership is not itself a "transferor" of a partnership interest in the traditional § 1446(f) se

VI. Specific Implications for Key Non-U.S. Investors A. Nordhaven Sovereign Wealth Fund Status and Commitments. The Nordhaven Sovereign Wealth Fund is a non-U.S. sovereign wealth fund wholly owned by the Kingdom of Nordhaven, a Nordic sovereign state. Nordhaven SWF is classified as a "foreign partner" for purposes of IRC § 1446 because it is not a United States person within the meaning of IRC § 7701(a)(30). Nordhave