1015-00001 · Graymont Brothers Inc · Registration Statement

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of shares of common stock of Calloway-Briggs Renewables Inc. acquired in this offering. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury regulations promulgated thereunder (whether final, temporary, or proposed), judicial decisions, and administrative rulings and published positions of the Internal Revenue Service (the "IRS"), all as in effect on the date of this prospectus. All of the foregoing authorities are subject to change or differing interpretation at any time, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.

This discussion applies only to shares of our common stock purchased by initial investors in this offering at the initial public offering price set forth on the cover page of this prospectus and held as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to particular investors in light of their individual circumstances or to investors subject to special treatment under the U.S. federal income tax laws, including, without limitation:

• banks, thrift institutions, and other financial institutions;

• insurance companies;

• tax-exempt organizations, including private foundations;

• dealers in securities or currencies;

• traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;

• persons holding our common stock as part of a hedge, straddle, constructive sale, conversion transaction, or other integrated transaction for U.S. federal income tax purposes;

• persons whose functional currency is not the U.S. dollar;

• regulated investment companies and real estate investment trusts;

• persons who acquired our common stock through the exercise or cancellation of employee stock options or otherwise as compensation for services;

• "controlled foreign corporations," "passive foreign investment companies," or corporations that accumulate earnings to avoid U.S. federal income tax;

• entities or arrangements treated as partnerships or other pass-through entities for U.S. federal income tax purposes, or investors in such entities;

• certain former citizens or long-term residents of the United States who are subject to the expatriation provisions of the Code; and

• persons subject to the alternative minimum tax provisions of the Code.

In addition, this discussion does not address the Medicare contribution tax on net investment income imposed under Section 1411 of the Code (except for a brief reference below under "— Tax Consequences to U.S. Holders — Net Investment Income Tax"), nor does it address any U.S. federal estate, gift, or generation-skipping transfer tax consequences, or any state, local, or non-U.S. tax consequences, of the purchase, ownership, or disposition of our common stock. Prospective investors should consult their own tax advisors regarding such tax consequences.

If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend upon the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding or considering an investment in our common stock and the partners in such partnerships should consult their own tax advisors regarding the U.S. federal income tax consequences to them of the purchase, ownership, and disposition of our common stock.

As used in this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;

• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or

• a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

As used in this discussion, the term "Non-U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, neither a U.S. Holder nor a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes).

This discussion is for general informational purposes only and is not tax advice. Prospective investors are urged to consult their own tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of purchasing, owning, and disposing of our common stock, including the applicability and effect of any tax treaties.

Tax Consequences to U.S. Holders

The following discussion summarizes the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our common stock by a U.S. Holder.

Distributions on Common Stock

Calloway-Briggs Renewables Inc. is organized as a Delaware C-corporation. As described under "Dividend Policy" elsewhere in this prospectus, we do not currently anticipate paying cash dividends on our common stock in the foreseeable future. In addition, our corporate credit agreements with Veltrano National Bank contain certain covenants that restrict our ability to pay dividends and make other distributions to our stockholders. However, if we do make distributions of cash or property with respect to shares of our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

To the extent that a distribution exceeds our current and accumulated earnings and profits, such excess will be treated first as a tax-free return of capital to the extent of the U.S. Holder's adjusted tax basis in the shares of common stock with respect to which the distribution is made. Any such return of capital will reduce (but not below zero) the U.S. Holder's adjusted tax basis in such shares. To the extent that the amount of any such distribution exceeds the U.S. Holder's adjusted tax basis in such shares, the excess will be treated as gain from the sale or exchange of such stock and will be subject to the tax treatment described below under "— Gain or Loss on Sale, Exchange, or Other Taxable Disposition."

Dividends received by non-corporate U.S. Holders (including individuals) that constitute "qualified dividend income" will generally be eligible for taxation at the preferential rates applicable to long-term capital gains, provided that certain holding period and other requirements are satisfied. A U.S. Holder must hold the shares of common stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date in order for dividends paid on such shares to be eligible for such preferential rates. In addition, the preferential rates for qualified dividend income will not apply if the U.S. Holder elects to treat the dividend income as "investment income" under Section 163(d)(4)(B) of the Code. U.S. Holders should consult their own tax advisors regarding the availability of the preferential tax rates for qualified dividend income in their particular circumstances.

Dividends received by corporate U.S. Holders may be eligible for the dividends-received deduction under Section 243 of the Code, subject to applicable limitations, including limitations based on the corporate U.S. Holder's taxable income, the corporate U.S. Holder's holding period for the shares, and the occurrence of certain extraordinary dividends. Corporate U.S. Holders should consult their own tax advisors regarding the availability and extent of the dividends-received deduction in their particular circumstances.

Gain or Loss on Sale, Exchange, or Other Taxable Disposition

A U.S. Holder will generally recognize gain or loss upon the sale, exchange, or other taxable disposition of shares of our common stock in an amount equal to the difference, if any, between (i) the amount of cash and the fair market value of any property received upon such disposition and (ii) the U.S. Holder's adjusted tax basis in the shares of common stock disposed of. A U.S. Holder's initial tax basis in shares of our common stock acquired in this offering will generally equal the initial public offering price paid for such shares. Such gain or loss will generally be capital gain or loss.

Capital gain or loss recognized upon the disposition of shares of our common stock will be long-term capital gain or loss if, at the time of the disposition, the U.S. Holder's holding period for the shares exceeded one year. Long-term capital gains recognized by non-corporate U.S. Holders (including individuals) are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations. Under current law, net capital losses of non-corporate taxpayers generally may be deducted against ordinary income in an amount not to exceed $3,000 per taxable year (or $1,500 in the case of a married individual filing a separate return). Unused capital losses may generally be carried forward to subsequent taxable years. Corporate taxpayers generally may deduct capital losses only to the extent of capital gains, and unused capital losses may be carried back three years and forward five years (subject to certain limitations).

Net Investment Income Tax

Certain U.S. Holders who are individuals, estates, or trusts with income exceeding certain thresholds may be subject to a 3.8% tax on "net investment income" under Section 1411 of the Code. Net investment income generally includes, among other things, dividends on and capital gains from the sale or other taxable disposition of stock, subject to certain exceptions. U.S. Holders that are individuals, estates, or trusts should consult their own tax advisors regarding the applicability of this tax to their particular situations, including the effect of the tax on income from dividends on, and gains from the disposition of, our common stock.

Information Reporting and Backup Withholding — U.S. Holders

Payments of dividends on, and proceeds from the sale or other disposition of, shares of our common stock may be subject to information reporting to the IRS. In addition, backup withholding (currently at a rate of 24%) may apply to such payments if the U.S. Holder fails to provide an accurate taxpayer identification number on a properly completed IRS Form W-9 or other appropriate form, fails to certify under penalties of perjury that such holder is not subject to backup withholding, or otherwise fails to comply with the applicable requirements of the backup withholding rules. Certain U.S. Holders (including corporations and certain tax-exempt organizations) may be exempt from information reporting and backup withholding, provided they properly demonstrate their eligibility for exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be credited against the U.S. Holder's U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding the application of the backup withholding rules to their particular circumstances and the availability of, and procedures for obtaining, an exemption from backup withholding.

Tax Consequences to Non-U.S. Holders

The following discussion summarizes the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our common stock by a Non-U.S. Holder. The rules governing the U.S. federal income tax treatment of Non-U.S. Holders are complex. Accordingly, the following discussion is intended only as a summary of the material U.S. federal income tax consequences applicable to Non-U.S. Holders and is not intended to be a complete analysis of all the U.S. federal income tax consequences that may be relevant to Non-U.S. Holders. Non-U.S. Holders should consult their own tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of purchasing, owning, and disposing of our common stock.

Distributions on Common Stock

Distributions on our common stock to a Non-U.S. Holder that are treated as dividends, as described above under "— Tax Consequences to U.S. Holders — Distributions on Common Stock," will generally be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the distribution, or at a reduced rate prescribed by an applicable income tax treaty, unless such dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a United States permanent establishment or fixed base maintained by such Non-U.S. Holder), as discussed below.

To claim the benefit of a reduced withholding rate under an applicable income tax treaty, the Non-U.S. Holder must generally provide a properly completed IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form), as the case may be, to the applicable withholding agent prior to the payment of dividends, certifying the Non-U.S. Holder's entitlement to the benefits of an applicable income tax treaty. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their own tax advisors regarding their entitlement to benefits under an applicable income tax treaty and the manner of claiming such benefits.

Dividends that are effectively connected with a Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder within the United States) are generally exempt from the 30% U.S. federal withholding tax described above, provided that the Non-U.S. Holder provides a properly completed IRS Form W-8ECI (or applicable successor form) to the applicable withholding agent. Instead, such effectively connected dividends are generally subject to U.S. federal income tax on a net-income basis at the regular graduated rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax at a rate of 30% (or a lower rate prescribed by an applicable income tax treaty) on its effectively connected earnings and profits for the taxable year, subject to certain adjustments. Non-U.S. Holders should consult their own tax advisors regarding any applicable income tax treaties that may provide for different rules.

To the extent that a distribution exceeds our current and accumulated earnings and profits and is treated as a return of capital or as gain from the sale or exchange of our common stock (as described above under "— Tax Consequences to U.S. Holders — Distributions on Common Stock"), the treatment of such distribution for Non-U.S. Holders will be governed by the rules described below under "— Gain or Loss on Sale, Exchange, or Other Taxable Disposition."

Gain or Loss on Sale, Exchange, or Other Taxable Disposition

A Non-U.S. Holder will generally not be subject to U.S. federal income tax on any gain recognized upon the sale, exchange, or other taxable disposition of our common stock unless:

(i) the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder within the United States), in which case the gain will be subject to U.S. federal income tax on a net-income basis at the regular graduated rates applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation for U.S. federal income tax purposes, the branch profits tax described above may also apply at a rate of 30% (or a lower rate prescribed by an applicable income tax treaty);

(ii) the Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year of the disposition and certain other conditions are met, in which case the gain (net of certain U.S.-source losses) will be subject to a flat 30% tax (or a lower rate prescribed by an applicable income tax treaty), which may be offset by U.S.-source capital losses recognized in the same taxable year, even though such individual is not considered a resident of the United States, provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses; or

(iii) we are or have been a "United States real property holding corporation" (a "USRPHC") within the meaning of Section 897(c)(2) of the Code for U.S. federal income tax purposes at any time during the shorter of (x) the five-year period ending on the date of the disposition and (y) the Non-U.S. Holder's holding period for the shares of our common stock, and, in such case, certain other conditions described below are not satisfied.

With respect to the third exception described above, we believe that we may be, or may become, a USRPHC for U.S. federal income tax purposes. A domestic corporation is generally classified as a USRPHC if the fair market value of its "United States real property interests" (as defined in Section 897(c)(1) of the Code) equals or exceeds 50% of the sum of the fair market values of (a) its United States real property interests, (b) its interests in real property located outside the United States, and (c) its other assets used or held for use in a trade or business. A significant portion of our assets consists of interests in U.S. real property, including land leases, easements, and rights-of-way for our approximately 3.8 GW of operating solar, wind, and battery-storage projects located across Texas, New Mexico, Arizona, California, and Oklahoma, as well as our approximately 1.4 GW of projects under construction and our approximately 6.2 GW development pipeline. Accordingly, we believe that the fair market value of our United States real property interests may equal or exceed 50% of the fair market value of our worldwide assets, and we therefore may constitute a USRPHC.

However, even if we are or become a USRPHC, gain recognized by a Non-U.S. Holder on a disposition of our common stock will not be subject to U.S. federal income tax under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") if our common stock is "regularly traded on an established securities market" (as defined in applicable Treasury regulations) and the Non-U.S. Holder held, actually or constructively (within the meaning of Section 897(c)(6)(C) of the Code), no more than 5% of our common stock at all times during the shorter of (x) the five-year period ending on the date of the disposition or (y) the Non-U.S. Holder's holding period for such common stock. We expect that, following this offering, our common stock will be listed on the New York Stock Exchange under the symbol "CBRI" and will constitute a class of stock that is regularly traded on an established securities market for purposes of the exception described in the preceding sentence. However, no assurance can be given that our common stock will be considered to be regularly traded on an established securities market at any particular time.

If our common stock is not considered to be regularly traded on an established securities market, or if a Non-U.S. Holder held (actually or constructively) more than 5% of our outstanding common stock during the applicable testing period, gains recognized by such Non-U.S. Holder on the disposition of our common stock would be subject to U.S. federal income tax under FIRPTA. Under FIRPTA, the Non-U.S. Holder would generally be taxed on the net gain derived from the disposition at regular graduated U.S. federal income tax rates, and the purchaser of the common stock would generally be required to withhold and remit to the IRS 15% of the amount realized on the disposition. Any amount so withheld would be creditable against the Non-U.S. Holder's U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS.

Non-U.S. Holders are urged to consult their own tax advisors regarding the potential application of FIRPTA to their investment in our common stock, including whether any applicable income tax treaty may modify the rules described above.

Information Reporting and Backup Withholding — Non-U.S. Holders

Payments of dividends on our common stock to a Non-U.S. Holder may be subject to information reporting and may be reported to the IRS and to the Non-U.S. Holder's country of residence pursuant to the provisions of an applicable income tax treaty or information exchange agreement. Copies of such information returns may also be made available to the tax authorities in the country in which the Non-U.S. Holder is a resident under the provisions of an applicable income tax treaty or information exchange agreement.

Backup withholding will generally not apply to payments of dividends on our common stock to a Non-U.S. Holder if the Non-U.S. Holder certifies its non-U.S. status by providing a properly completed IRS Form W-8BEN, IRS Form W-8BEN-E, or other applicable IRS Form W-8, or otherwise establishes an exemption from backup withholding.

Information reporting and backup withholding may apply to the proceeds from a disposition of our common stock by a Non-U.S. Holder effected by or through a U.S. office of a broker, unless the Non-U.S. Holder provides appropriate certification of its non-U.S. status to the broker (generally on IRS Form W-8BEN, IRS Form W-8BEN-E, or other applicable IRS Form W-8) or otherwise establishes an exemption from information reporting and backup withholding. A disposition of our common stock by a Non-U.S. Holder effected through a non-U.S. office of a U.S. broker or a non-U.S. broker with certain connections to the United States may also be subject to information reporting (but generally not backup withholding) unless the Non-U.S. Holder provides appropriate certification or otherwise establishes an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. Non-U.S. Holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to their particular circumstances.

FATCA (Foreign Account Tax Compliance Act)

Under Sections 1471 through 1474 of the Code, and the U.S. Treasury regulations and administrative guidance promulgated thereunder (commonly referred to as "FATCA"), a 30% withholding tax may be imposed on certain payments to a "foreign financial institution" (as specifically defined under FATCA) unless such institution enters into an agreement with the U.S. Department of the Treasury to, among other things, collect and report on an annual basis certain information regarding accounts held by certain United States persons (or held by foreign entities in which certain United States persons hold a substantial ownership interest), or unless such institution is otherwise exempt from such requirements. FATCA also generally imposes a 30% withholding tax on certain payments to a "non-financial foreign entity" (as specifically defined under FATCA) unless such entity provides the withholding agent with either a certification that it does not have any "substantial United States owners" (as defined under FATCA) or provides the withholding agent with certain information regarding such entity's substantial United States owners, or unless such entity is otherwise exempt from such requirements. An intergovernmental agreement between the United States and an applicable foreign country may modify the foregoing requirements for financial institutions and other entities organized or resident in that country.

The withholding taxes described above currently apply to payments of dividends on our common stock. Proposed U.S. Treasury regulations, upon which taxpayers may generally rely, would eliminate the FATCA withholding tax on gross proceeds from the sale or other disposition of instruments that can produce U.S.-source dividends, including our common stock. It should be noted, however, that these proposed regulations have not been finalized and may be subject to change.

If FATCA withholding is imposed on a payment to a Non-U.S. Holder, a beneficial owner of our common stock who is not a foreign financial institution and who is otherwise eligible for an exemption from, or a reduced rate of, withholding under an applicable income tax treaty or under U.S. domestic law generally will be entitled to obtain a refund of any amounts withheld under FATCA by timely filing an appropriate claim for refund with the IRS.

Non-U.S. Holders should consult their own tax advisors regarding the potential application of FATCA to their investment in our common stock.

Tax Counsel and Consultation

The preceding discussion is a summary of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of shares of common stock of Calloway-Briggs Renewables Inc. acquired in this offering. This discussion does not purport to address all potential tax considerations that may be relevant to a particular investor and does not constitute legal or tax advice. Each prospective investor is urged to consult its own tax advisor regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of the purchase, ownership, and disposition of our common stock, in light of such investor's particular circumstances, including the applicability and effect of any tax treaties, as well as any subsequently enacted tax legislation or other changes in applicable law.

The discussion of material U.S. federal income tax consequences set forth above is the opinion of Calderwood & Harkness LLP, counsel to Calloway-Briggs Renewables Inc., based on current law. Neither the Company nor its counsel can assure you that the IRS will not challenge one or more of the conclusions stated herein, and no ruling from the IRS has been or will be sought with respect to any of the matters discussed herein. If the IRS were to successfully challenge any of the conclusions set forth herein, the tax consequences to purchasers, owners, and holders of our common stock could be materially and adversely different from those described in this prospectus.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of shares of common stock of Calloway-Briggs Renewables Inc. acquired in this offering. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury regulations promulgated thereunder (whether final, temporary, or proposed), judicial decisions, and administrative rulings and published positions of the Internal Revenue Service (the "IRS"), all as in effect on the date of this prospectus. All of the foregoing authorities are subject to change or differing interpretation at any time, possibly with retroactive effect. Any such change or differing interpretation could affect the accuracy of the statements and conclusions set forth in this discussion. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences described below.
This discussion applies only to shares of our common stock purchased by initial investors in this offering at the initial public offering price set forth on the cover page of this prospectus and held as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all aspects of U.S. federal income taxation that may be relevant to particular investors in light of their individual circumstances or to investors subject to special treatment under the U.S. federal income tax laws, including, without limitation:
• banks, thrift institutions, and other financial institutions;
• insurance companies;
• tax-exempt organizations, including private foundations;
• dealers in securities or currencies;
• traders in securities that elect to use a mark-to-market method of accounting for their securities holdings;
• persons holding our common stock as part of a hedge, straddle, constructive sale, conversion transaction, or other integrated transaction for U.S. federal income tax purposes;
• persons whose functional currency is not the U.S. dollar;
• regulated investment companies and real estate investment trusts;
• persons who acquired our common stock through the exercise or cancellation of employee stock options or otherwise as compensation for services;
• "controlled foreign corporations," "passive foreign investment companies," or corporations that accumulate earnings to avoid U.S. federal income tax;
• entities or arrangements treated as partnerships or other pass-through entities for U.S. federal income tax purposes, or investors in such entities;
• certain former citizens or long-term residents of the United States who are subject to the expatriation provisions of the Code; and
• persons subject to the alternative minimum tax provisions of the Code.
In addition, this discussion does not address the Medicare contribution tax on net investment income imposed under Section 1411 of the Code (except for a brief reference below under "— Tax Consequences to U.S. Holders — Net Investment Income Tax"), nor does it address any U.S. federal estate, gift, or generation-skipping transfer tax consequences, or any state, local, or non-U.S. tax consequences, of the purchase, ownership, or disposition of our common stock. Prospective investors should consult their own tax advisors regarding such tax consequences.
If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend upon the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding or considering an investment in our common stock and the partners in such partnerships should consult their own tax advisors regarding the U.S. federal income tax consequences to them of the purchase, ownership, and disposition of our common stock.
As used in this discussion, the term "U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof, or the District of Columbia;
• an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or
• a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons (within the meaning of Section 7701(a)(30) of the Code) have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.
As used in this discussion, the term "Non-U.S. Holder" means a beneficial owner of our common stock that is, for U.S. federal income tax purposes, neither a U.S. Holder nor a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes).
This discussion is for general informational purposes only and is not tax advice. Prospective investors are urged to consult their own tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of purchasing, owning, and disposing of our common stock, including the applicability and effect of any tax treaties.
Tax Consequences to U.S. Holders
The following discussion summarizes the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our common stock by a U.S. Holder.
Distributions on Common Stock
Calloway-Briggs Renewables Inc. is organized as a Delaware C-corporation. As described under "Dividend Policy" elsewhere in this prospectus, we do not currently anticipate paying cash dividends on our common stock in the foreseeable future. In addition, our corporate credit agreements with Veltrano National Bank contain certain covenants that restrict our ability to pay dividends and make other distributions to our stockholders. However, if we do make distributions of cash or property with respect to shares of our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.
To the extent that a distribution exceeds our current and accumulated earnings and profits, such excess will be treated first as a tax-free return of capital to the extent of the U.S. Holder's adjusted tax basis in the shares of common stock with respect to which the distribution is made. Any such return of capital will reduce (but not below zero) the U.S. Holder's adjusted tax basis in such shares. To the extent that the amount of any such distribution exceeds the U.S. Holder's adjusted tax basis in such shares, the excess will be treated as gain from the sale or exchange of such stock and will be subject to the tax treatment described below under "— Gain or Loss on Sale, Exchange, or Other Taxable Disposition."
Dividends received by non-corporate U.S. Holders (including individuals) that constitute "qualified dividend income" will generally be eligible for taxation at the preferential rates applicable to long-term capital gains, provided that certain holding period and other requirements are satisfied. A U.S. Holder must hold the shares of common stock for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date in order for dividends paid on such shares to be eligible for such preferential rates. In addition, the preferential rates for qualified dividend income will not apply if the U.S. Holder elects to treat the dividend income as "investment income" under Section 163(d)(4)(B) of the Code. U.S. Holders should consult their own tax advisors regarding the availability of the preferential tax rates for qualified dividend income in their particular circumstances.
Dividends received by corporate U.S. Holders may be eligible for the dividends-received deduction under Section 243 of the Code, subject to applicable limitations, including limitations based on the corporate U.S. Holder's taxable income, the corporate U.S. Holder's holding period for the shares, and the occurrence of certain extraordinary dividends. Corporate U.S. Holders should consult their own tax advisors regarding the availability and extent of the dividends-received deduction in their particular circumstances.
Gain or Loss on Sale, Exchange, or Other Taxable Disposition
A U.S. Holder will generally recognize gain or loss upon the sale, exchange, or other taxable disposition of shares of our common stock in an amount equal to the difference, if any, between (i) the amount of cash and the fair market value of any property received upon such disposition and (ii) the U.S. Holder's adjusted tax basis in the shares of common stock disposed of. A U.S. Holder's initial tax basis in shares of our common stock acquired in this offering will generally equal the initial public offering price paid for such shares. Such gain or loss will generally be capital gain or loss.
Capital gain or loss recognized upon the disposition of shares of our common stock will be long-term capital gain or loss if, at the time of the disposition, the U.S. Holder's holding period for the shares exceeded one year. Long-term capital gains recognized by non-corporate U.S. Holders (including individuals) are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations. Under current law, net capital losses of non-corporate taxpayers generally may be deducted against ordinary income in an amount not to exceed $3,000 per taxable year (or $1,500 in the case of a married individual filing a separate return). Unused capital losses may generally be carried forward to subsequent taxable years. Corporate taxpayers generally may deduct capital losses only to the extent of capital gains, and unused capital losses may be carried back three years and forward five years (subject to certain limitations).
Net Investment Income Tax
Certain U.S. Holders who are individuals, estates, or trusts with income exceeding certain thresholds may be subject to a 3.8% tax on "net investment income" under Section 1411 of the Code. Net investment income generally includes, among other things, dividends on and capital gains from the sale or other taxable disposition of stock, subject to certain exceptions. U.S. Holders that are individuals, estates, or trusts should consult their own tax advisors regarding the applicability of this tax to their particular situations, including the effect of the tax on income from dividends on, and gains from the disposition of, our common stock.
Information Reporting and Backup Withholding — U.S. Holders
Payments of dividends on, and proceeds from the sale or other disposition of, shares of our common stock may be subject to information reporting to the IRS. In addition, backup withholding (currently at a rate of 24%) may apply to such payments if the U.S. Holder fails to provide an accurate taxpayer identification number on a properly completed IRS Form W-9 or other appropriate form, fails to certify under penalties of perjury that such holder is not subject to backup withholding, or otherwise fails to comply with the applicable requirements of the backup withholding rules. Certain U.S. Holders (including corporations and certain tax-exempt organizations) may be exempt from information reporting and backup withholding, provided they properly demonstrate their eligibility for exemption.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be credited against the U.S. Holder's U.S. federal income tax liability and may entitle the U.S. Holder to a refund, provided that the required information is timely furnished to the IRS. U.S. Holders should consult their own tax advisors regarding the application of the backup withholding rules to their particular circumstances and the availability of, and procedures for obtaining, an exemption from backup withholding.
Tax Consequences to Non-U.S. Holders
The following discussion summarizes the material U.S. federal income tax consequences of the purchase, ownership, and disposition of our common stock by a Non-U.S. Holder. The rules governing the U.S. federal income tax treatment of Non-U.S. Holders are complex. Accordingly, the following discussion is intended only as a summary of the material U.S. federal income tax consequences applicable to Non-U.S. Holders and is not intended to be a complete analysis of all the U.S. federal income tax consequences that may be relevant to Non-U.S. Holders. Non-U.S. Holders should consult their own tax advisors regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of purchasing, owning, and disposing of our common stock.
Distributions on Common Stock
Distributions on our common stock to a Non-U.S. Holder that are treated as dividends, as described above under "— Tax Consequences to U.S. Holders — Distributions on Common Stock," will generally be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the distribution, or at a reduced rate prescribed by an applicable income tax treaty, unless such dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a United States permanent establishment or fixed base maintained by such Non-U.S. Holder), as discussed below.
To claim the benefit of a reduced withholding rate under an applicable income tax treaty, the Non-U.S. Holder must generally provide a properly completed IRS Form W-8BEN or IRS Form W-8BEN-E (or applicable successor form), as the case may be, to the applicable withholding agent prior to the payment of dividends, certifying the Non-U.S. Holder's entitlement to the benefits of an applicable income tax treaty. A Non-U.S. Holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their own tax advisors regarding their entitlement to benefits under an applicable income tax treaty and the manner of claiming such benefits.
Dividends that are effectively connected with a Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, are attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder within the United States) are generally exempt from the 30% U.S. federal withholding tax described above, provided that the Non-U.S. Holder provides a properly completed IRS Form W-8ECI (or applicable successor form) to the applicable withholding agent. Instead, such effectively connected dividends are generally subject to U.S. federal income tax on a net-income basis at the regular graduated rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax at a rate of 30% (or a lower rate prescribed by an applicable income tax treaty) on its effectively connected earnings and profits for the taxable year, subject to certain adjustments. Non-U.S. Holders should consult their own tax advisors regarding any applicable income tax treaties that may provide for different rules.
To the extent that a distribution exceeds our current and accumulated earnings and profits and is treated as a return of capital or as gain from the sale or exchange of our common stock (as described above under "— Tax Consequences to U.S. Holders — Distributions on Common Stock"), the treatment of such distribution for Non-U.S. Holders will be governed by the rules described below under "— Gain or Loss on Sale, Exchange, or Other Taxable Disposition."
Gain or Loss on Sale, Exchange, or Other Taxable Disposition
A Non-U.S. Holder will generally not be subject to U.S. federal income tax on any gain recognized upon the sale, exchange, or other taxable disposition of our common stock unless:
(i) the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder within the United States), in which case the gain will be subject to U.S. federal income tax on a net-income basis at the regular graduated rates applicable to U.S. persons, and, if the Non-U.S. Holder is a corporation for U.S. federal income tax purposes, the branch profits tax described above may also apply at a rate of 30% (or a lower rate prescribed by an applicable income tax treaty);
(ii) the Non-U.S. Holder is a nonresident alien individual who is present in the United States for 183 days or more during the taxable year of the disposition and certain other conditions are met, in which case the gain (net of certain U.S.-source losses) will be subject to a flat 30% tax (or a lower rate prescribed by an applicable income tax treaty), which may be offset by U.S.-source capital losses recognized in the same taxable year, even though such individual is not considered a resident of the United States, provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses; or
(iii) we are or have been a "United States real property holding corporation" (a "USRPHC") within the meaning of Section 897(c)(2) of the Code for U.S. federal income tax purposes at any time during the shorter of (x) the five-year period ending on the date of the disposition and (y) the Non-U.S. Holder's holding period for the shares of our common stock, and, in such case, certain other conditions described below are not satisfied.
With respect to the third exception described above, we believe that we may be, or may become, a USRPHC for U.S. federal income tax purposes. A domestic corporation is generally classified as a USRPHC if the fair market value of its "United States real property interests" (as defined in Section 897(c)(1) of the Code) equals or exceeds 50% of the sum of the fair market values of (a) its United States real property interests, (b) its interests in real property located outside the United States, and (c) its other assets used or held for use in a trade or business. A significant portion of our assets consists of interests in U.S. real property, including land leases, easements, and rights-of-way for our approximately 3.8 GW of operating solar, wind, and battery-storage projects located across Texas, New Mexico, Arizona, California, and Oklahoma, as well as our approximately 1.4 GW of projects under construction and our approximately 6.2 GW development pipeline. Accordingly, we believe that the fair market value of our United States real property interests may equal or exceed 50% of the fair market value of our worldwide assets, and we therefore may constitute a USRPHC.
However, even if we are or become a USRPHC, gain recognized by a Non-U.S. Holder on a disposition of our common stock will not be subject to U.S. federal income tax under the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA") if our common stock is "regularly traded on an established securities market" (as defined in applicable Treasury regulations) and the Non-U.S. Holder held, actually or constructively (within the meaning of Section 897(c)(6)(C) of the Code), no more than 5% of our common stock at all times during the shorter of (x) the five-year period ending on the date of the disposition or (y) the Non-U.S. Holder's holding period for such common stock. We expect that, following this offering, our common stock will be listed on the New York Stock Exchange under the symbol "CBRI" and will constitute a class of stock that is regularly traded on an established securities market for purposes of the exception described in the preceding sentence. However, no assurance can be given that our common stock will be considered to be regularly traded on an established securities market at any particular time.
If our common stock is not considered to be regularly traded on an established securities market, or if a Non-U.S. Holder held (actually or constructively) more than 5% of our outstanding common stock during the applicable testing period, gains recognized by such Non-U.S. Holder on the disposition of our common stock would be subject to U.S. federal income tax under FIRPTA. Under FIRPTA, the Non-U.S. Holder would generally be taxed on the net gain derived from the disposition at regular graduated U.S. federal income tax rates, and the purchaser of the common stock would generally be required to withhold and remit to the IRS 15% of the amount realized on the disposition. Any amount so withheld would be creditable against the Non-U.S. Holder's U.S. federal income tax liability and may entitle such holder to a refund, provided the required information is timely furnished to the IRS.
Non-U.S. Holders are urged to consult their own tax advisors regarding the potential application of FIRPTA to their investment in our common stock, including whether any applicable income tax treaty may modify the rules described above.
Information Reporting and Backup Withholding — Non-U.S. Holders
Payments of dividends on our common stock to a Non-U.S. Holder may be subject to information reporting and may be reported to the IRS and to the Non-U.S. Holder's country of residence pursuant to the provisions of an applicable income tax treaty or information exchange agreement. Copies of such information returns may also be made available to the tax authorities in the country in which the Non-U.S. Holder is a resident under the provisions of an applicable income tax treaty or information exchange agreement.
Backup withholding will generally not apply to payments of dividends on our common stock to a Non-U.S. Holder if the Non-U.S. Holder certifies its non-U.S. status by providing a properly completed IRS Form W-8BEN, IRS Form W-8BEN-E, or other applicable IRS Form W-8, or otherwise establishes an exemption from backup withholding.
Information reporting and backup withholding may apply to the proceeds from a disposition of our common stock by a Non-U.S. Holder effected by or through a U.S. office of a broker, unless the Non-U.S. Holder provides appropriate certification of its non-U.S. status to the broker (generally on IRS Form W-8BEN, IRS Form W-8BEN-E, or other applicable IRS Form W-8) or otherwise establishes an exemption from information reporting and backup withholding. A disposition of our common stock by a Non-U.S. Holder effected through a non-U.S. office of a U.S. broker or a non-U.S. broker with certain connections to the United States may also be subject to information reporting (but generally not backup withholding) unless the Non-U.S. Holder provides appropriate certification or otherwise establishes an exemption.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS. Non-U.S. Holders should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to their particular circumstances.
FATCA (Foreign Account Tax Compliance Act)
Under Sections 1471 through 1474 of the Code, and the U.S. Treasury regulations and administrative guidance promulgated thereunder (commonly referred to as "FATCA"), a 30% withholding tax may be imposed on certain payments to a "foreign financial institution" (as specifically defined under FATCA) unless such institution enters into an agreement with the U.S. Department of the Treasury to, among other things, collect and report on an annual basis certain information regarding accounts held by certain United States persons (or held by foreign entities in which certain United States persons hold a substantial ownership interest), or unless such institution is otherwise exempt from such requirements. FATCA also generally imposes a 30% withholding tax on certain payments to a "non-financial foreign entity" (as specifically defined under FATCA) unless such entity provides the withholding agent with either a certification that it does not have any "substantial United States owners" (as defined under FATCA) or provides the withholding agent with certain information regarding such entity's substantial United States owners, or unless such entity is otherwise exempt from such requirements. An intergovernmental agreement between the United States and an applicable foreign country may modify the foregoing requirements for financial institutions and other entities organized or resident in that country.
The withholding taxes described above currently apply to payments of dividends on our common stock. Proposed U.S. Treasury regulations, upon which taxpayers may generally rely, would eliminate the FATCA withholding tax on gross proceeds from the sale or other disposition of instruments that can produce U.S.-source dividends, including our common stock. It should be noted, however, that these proposed regulations have not been finalized and may be subject to change.
If FATCA withholding is imposed on a payment to a Non-U.S. Holder, a beneficial owner of our common stock who is not a foreign financial institution and who is otherwise eligible for an exemption from, or a reduced rate of, withholding under an applicable income tax treaty or under U.S. domestic law generally will be entitled to obtain a refund of any amounts withheld under FATCA by timely filing an appropriate claim for refund with the IRS.
Non-U.S. Holders should consult their own tax advisors regarding the potential application of FATCA to their investment in our common stock.
Tax Counsel and Consultation
The preceding discussion is a summary of the material U.S. federal income tax consequences of the purchase, ownership, and disposition of shares of common stock of Calloway-Briggs Renewables Inc. acquired in this offering. This discussion does not purport to address all potential tax considerations that may be relevant to a particular investor and does not constitute legal or tax advice. Each prospective investor is urged to consult its own tax advisor regarding the U.S. federal, state, local, and non-U.S. income and other tax consequences of the purchase, ownership, and disposition of our common stock, in light of such investor's particular circumstances, including the applicability and effect of any tax treaties, as well as any subsequently enacted tax legislation or other changes in applicable law.
The discussion of material U.S. federal income tax consequences set forth above is the opinion of Calderwood & Harkness LLP, counsel to Calloway-Briggs Renewables Inc., based on current law. Neither the Company nor its counsel can assure you that the IRS will not challenge one or more of the conclusions stated herein, and no ruling from the IRS has been or will be sought with respect to any of the matters discussed herein. If the IRS were to successfully challenge any of the conclusions set forth herein, the tax consequences to purchasers, owners, and holders of our common stock could be materially and adversely different from those described in this prospectus.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

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