Contract analysis

I. EXECUTIVE SUMMARY The purpose of this memorandum is to analyze the United States federal income tax consequences under Section 731 of the Internal Revenue Code of 1986, as amended (the "Code" or "IRC"), of Step 5 of the proposed five-step cross-border reorganization of the fund platform of Solara Digital Infrastructure LP ("Solara" or "SDILP"). This memorandum is one in a series of companion memoranda prepared by

II. STATEMENT OF FACTS The following facts have been provided by the client and its advisors and are set forth for purposes of this memorandum. All financial data is current as of March 31, 2025, unless otherwise indicated. We have relied upon the accuracy of these facts, including financial data provided by Caldwell Pierce & Co. LLP, Solara's independent auditor, and have not independently verified such data. A. Ove

III. ISSUES PRESENTED This memorandum addresses the following issues arising under IRC § 731 in connection with the Step 5 distributions:

1. Whether the distributions by each Legacy Offshore Vehicle of its partnership interest in the Consolidated Master Fund LP to its LPs in dissolution and liquidation are treated as tax-free distributions under IRC § 731(a)(1), resulting in no gain recognition to the distributee LPs.

2. Whether any gain or loss is recognized by the distributing partnerships (i.e., the four Legacy Offshore Vehicles) under IRC § 731(b) as a result of the Step 5 distributions.

3. Whether the distributed Consolidated Master Fund LP interests could be treated as "money" under IRC § 731(a)(1) or otherwise trigger gain recognition to the distributee LPs under any provision of the Code.

4. Whether the distributed Consolidated Master Fund LP interests constitute "marketable securities" treated as money under IRC § 731(c), which would potentially require gain recognition by the distributee LPs. This issue is the subject of a cross-reference to the companion § 731(c) Memorandum.

5. Whether the Step 5 distributions constitute liquidating distributions or current distributions for purposes of Subchapter K, and the applicable analytical framework for determining basis and gain or loss consequences.

6. The interaction of IRC § 731 with IRC § 752 liability shifts occurring as a result of the dissolution of the Legacy Offshore Vehicles. This issue is the subject of a cross-reference to the companion § 752 Memorandum.

1. Yes. The Step 5 distributions are tax-free under IRC § 731(a)(1). No gain is recognized by the distributee LPs because the LPs receive property other than money (i.e., limited partnership interests in the Consolidated Master Fund LP), and the IRC § 731(c) marketable securities exception does not apply to treat the distributed partnership interests as money. No loss is recognized under § 731(a)(2) because the LPs r

2. No gain or loss is recognized by the distributing partnerships. Under IRC § 731(b), no gain or loss shall be recognized to a partnership on a distribution to a partner of property, including money. This rule applies to each of the four Legacy Offshore Vehicles distributing its Consolidated Master Fund LP interest to its LPs in liquidation.

3. No. The Consolidated Master Fund LP interests are "property" within the meaning of IRC § 731, not "money." They are not treated as money under any provision of the Code other than IRC § 731(c), and, as set forth in the response to Issue 4 below, § 731(c) does not apply.

4. No. The Consolidated Master Fund LP interests are not "marketable securities" under IRC § 731(c)(2) because they are not traded on an established securities market, are not listed on any national securities exchange, are not regularly quoted on any interdealer quotation system, and are subject to substantial transfer restrictions under the Consolidated Master Fund's limited partnership agreement. A detailed analys

5. Liquidating distributions. Because each Legacy Offshore Vehicle is dissolving and distributing all of its remaining assets (consisting solely of its Consolidated Master Fund LP interest) to its LPs, the Step 5 distributions constitute liquidating distributions of each LP's entire interest in the applicable Legacy Offshore Vehicle. Accordingly, the basis of the distributed Consolidated Master Fund LP interest in th

6. Liability shifts under § 752 do not alter the nonrecognition conclusion. Although the dissolution of the Legacy Offshore Vehicles will cause liability shifts that produce deemed money distributions under IRC § 752(b), the companion § 752 Memorandum concludes that the netting rules of Treasury Regulations Section 1.752-1(f) prevent any LP from experiencing a net deemed money distribution in excess of its adjusted b

V. ANALYSIS A. Statutory Framework — IRC § 731 Overview

1. Section 731(a) — Distribution to Partners IRC § 731(a) sets forth the general rules governing gain and loss recognition by partners upon distributions of property by a partnership. Section 731(a) provides two operative rules: Under § 731(a)(1), in the case of a distribution by a partnership to a partner, gain shall not be recognized to the partner except to the extent that any money distributed exceeds the adjuste

2. Section 731(b) — No Gain or Loss to Distributing Partnership IRC § 731(b) provides a simple and absolute rule: no gain or loss shall be recognized to a partnership on a distribution to a partner of property, including money. This provision applies to the partnership level and is not subject to any of the exceptions that apply at the partner level (e.g., the money-exceeds-basis exception of § 731(a)(1) or the marke

3. Section 731(c) — Marketable Securities Treated as Money IRC § 731(c), enacted as part of the Revenue Reconciliation Act of 1994 (Pub. L. No. 103-465, § 741), provides a significant exception to the general nonrecognition rule of § 731(a)(1). Under § 731(c)(1)(A), for purposes of § 731(a)(1) and § 737, the term "money" includes marketable securities. This means that if a partnership distributes marketable securitie

Section 731(c)(2) defines "marketable securities" as financial instruments (including stocks, bonds, notes, and other financial instruments specified by the Secretary) that are, as of the date of the distribution, "actively traded" within the meaning of § 1092(d)(1). Under § 1092(d)(1), a financial instrument is "actively traded" if it is traded on (or subject to the rules of) a national securities exchange that is r

1. Nature of the Distributions — Liquidating vs. Current The distinction between a current distribution and a liquidating distribution is significant under Subchapter K because different basis rules apply. In a current distribution, the basis of distributed property in the hands of the distributee partner is determined under § 732(a), which provides that the partner's basis in the distributed property equals the dist

2. Property vs. Money Characterization The critical threshold question under § 731(a)(1) is whether the distributed item is "money" or "property." If the distributed item is property (other than money or marketable securities treated as money), no gain is recognized to the distributee partner, regardless of the fair market value of the distributed property. The Consolidated Master Fund LP interests distributed in Ste

1. No Money Distributed The sole property distributed by each Legacy Offshore Vehicle to its LPs in Step 5 is a limited partnership interest in the Consolidated Master Fund LP. No cash, checks, demand deposits, or other items constituting "money" within the meaning of § 731(a)(1) are distributed as part of Step 5. The Legacy Offshore Vehicles will not make any cash distributions, declare any dividends (the partnershi

2. Section 731(c) — Marketable Securities Analysis (Summary) As discussed in Section V.A.3 above, IRC § 731(c) provides that for purposes of § 731(a)(1), the term "money" includes marketable securities. If the Consolidated Master Fund LP interests were "marketable securities" within the meaning of § 731(c)(2), the distribution of such interests would be treated as a distribution of money to the extent of the fair mar

3. Basis Consequences Under § 732(b) Because the Step 5 distributions are liquidating distributions (as discussed in Section V.B.1 above), the basis of the Consolidated Master Fund LP interest received by each distributee LP is determined under IRC § 732(b). Under § 732(b), the basis of distributed property received by a partner in liquidation of the partner's interest in a partnership shall be an amount equal to the

4. Holding Period — § 1223(1) Under IRC § 1223(1), the holding period of property received in a nonrecognition transaction includes the holding period of the property exchanged, provided that the property received has the same basis in whole or in part as the property exchanged, or that the property received was received in a transaction where no gain or loss was recognized. Because the Step 5 distributions are nonre

1. Overview of the § 752 Issue The dissolution of the Legacy Offshore Vehicles in Step 5 creates a potential § 752 issue that must be analyzed in conjunction with the § 731 distribution analysis. Under IRC § 752(b), any decrease in a partner's share of the liabilities of a partnership, or any decrease in a partner's individual liabilities by reason of the assumption by the partnership of such individual liabilities,

2. Cross-Reference to § 752 Memorandum The companion Tax Memorandum — IRC § 752 Liability Shifting Analysis provides a detailed, LP-by-LP modeling of the $1.34 billion in aggregate liabilities across all partners. That memorandum applies the liability allocation rules of Treasury Regulations Sections 1.752-1 through 1.752-4, including the rules for recourse liabilities (Treas. Reg. § 1.752-2) and nonrecourse liabilit

3. Summary Conclusion on § 752 Interaction After application of the netting rules of Treas. Reg. § 1.752-1(f), no LP experiences a net deemed money distribution under § 752(b) that exceeds the LP's adjusted basis in its Legacy Offshore Vehicle interest. Accordingly, the § 752 liability shifts associated with the Step 5 distributions do not cause gain recognition under § 731(a)(1). The nonrecognition treatment of the

1. Fund IV-A (Cayman) LP Pre-Step 5 Facts. In Step 2 (target effective date October 1, 2025), Fund IV-A (Cayman) LP contributed all of its portfolio assets to the Consolidated Master Fund LP. The contributed assets had an aggregate FMV of approximately $2.31 billion, an aggregate adjusted tax basis of approximately $1.62 billion, and aggregate built-in gain of approximately $690 million. Key portfolio companies contr

§ 731(a)(1) Analysis. No money is distributed by Fund IV-A Cayman to any LP. The sole distributed property is the Consolidated Master Fund LP interest, which is "property" and not "money." The § 731(c) marketable securities exception does not apply. Accordingly, no gain is recognized by any distributee LP under § 731(a)(1).

§ 731(b) Analysis. Under § 731(b), Fund IV-A Cayman recognizes no gain or loss on the distribution of the Consolidated Master Fund LP interest to its LPs.

§ 732(b) Basis Consequence. Each LP of Fund IV-A Cayman takes a basis in its received Consolidated Master Fund LP interest equal to the LP's adjusted basis in its Fund IV-A Cayman interest, reduced by any money received (zero).

2. Fund IV-B (Luxembourg) SCSp Pre-Step 5 Facts. In Step 3 (target effective date October 15, 2025), Fund IV-B (Luxembourg) SCSp contributed all of its portfolio assets to the Consolidated Master Fund LP. The contributed assets had an aggregate FMV of approximately €1.07 billion ($1.16 billion), an aggregate adjusted tax basis of approximately €782 million ($844.6 million), and aggregate built-in gain of approximatel

§ 731 Analysis. The § 731 analysis for Fund IV-B Lux is identical in all material respects to the analysis for Fund IV-A Cayman. No money is distributed; no gain is recognized by the distributee LPs under § 731(a)(1); no gain or loss is recognized by Fund IV-B Lux under § 731(b); and each LP's basis in its received Consolidated Master Fund LP interest is determined under § 732(b). Luxembourg Dissolution. The dissolut

3. Fund V-A (Cayman) LP Pre-Step 5 Facts. In Step 4 (target effective date November 1, 2025), Fund V-A (Cayman) LP contributed all of its portfolio assets to the Consolidated Master Fund LP. The contributed assets had an aggregate FMV of approximately $2.89 billion, an aggregate adjusted tax basis of approximately $2.34 billion, and aggregate built-in gain of approximately $550 million. Key portfolio companies contri

§ 731 Analysis. The same nonrecognition analysis applies. No money is distributed; no gain is recognized under § 731(a)(1); no gain or loss is recognized by Fund V-A Cayman under § 731(b); and each LP's basis is determined under § 732(b). The analysis is identical in all material respects to the analyses for Fund IV-A Cayman and Fund IV-B Lux.

4. Fund V-B (Luxembourg) SCSp Pre-Step 5 Facts. In Step 4 (target effective date November 1, 2025), Fund V-B (Luxembourg) SCSp contributed all of its portfolio assets to the Consolidated Master Fund LP. The contributed assets had an aggregate FMV of approximately €1.29 billion ($1.39 billion), an aggregate adjusted tax basis of approximately €1.14 billion ($1.23 billion), and aggregate built-in gain of approximately

§ 731 Analysis. The same § 731 nonrecognition analysis applies as described above for the other three Legacy Offshore Vehicles.